The importance and the contribution of the Small and Medium Enterprise sector in India, is well established. There is surely no denying the fact that SMEs are playing an increasingly important role in the emerging Indian economy. There are more jobs being created at all levels.
Inclusive growth:
While we talk about inclusive growth which is crucial for India to actually grow as a country, its an essential must for the Small and Medium Enterprises to grow to the next level. These include the SMEs established in even the rural parts of the country, which are bound together as industry clusters.
The Story:
If you take a close look at the Automobile sector in India, looking at the demand side of the story, the demand has increased multi-folds in the past few years. Especially from the urban areas, there has been an exponential rise in customer's buying trends. The recent consumption numbers from the Automobile industry has shown a rise in demand for high end vehicles. This is all happening while, markets globally are still recovering from the recession which hit the global markets.
The rise of the Automobile industry has fueled growth for the Auto Components industry as a resultant.
The Growth:
Since the year 2000, the Auto Components industry has not only grown due to the increasing domestic consumption patterns, but also due to the rise in International demand of high end, quality components. The manufacturing and labor costs being lesser in India, its all the more favorable for the Global auto component makers to either establish base in India (hence FDI flowing) or partner with well established Indian counterparts who are delivering or have the potential of delivering the desired quality.
The growth factors for the auto component industry that will drive potential growth are:
Inclusive growth:
While we talk about inclusive growth which is crucial for India to actually grow as a country, its an essential must for the Small and Medium Enterprises to grow to the next level. These include the SMEs established in even the rural parts of the country, which are bound together as industry clusters.
The Story:
If you take a close look at the Automobile sector in India, looking at the demand side of the story, the demand has increased multi-folds in the past few years. Especially from the urban areas, there has been an exponential rise in customer's buying trends. The recent consumption numbers from the Automobile industry has shown a rise in demand for high end vehicles. This is all happening while, markets globally are still recovering from the recession which hit the global markets.
The rise of the Automobile industry has fueled growth for the Auto Components industry as a resultant.
The Growth:
Since the year 2000, the Auto Components industry has not only grown due to the increasing domestic consumption patterns, but also due to the rise in International demand of high end, quality components. The manufacturing and labor costs being lesser in India, its all the more favorable for the Global auto component makers to either establish base in India (hence FDI flowing) or partner with well established Indian counterparts who are delivering or have the potential of delivering the desired quality.
The growth factors for the auto component industry that will drive potential growth are:
- Rising Domestic consumption patterns will boost the growth for the auto components industry. The still growing penetration with rising income levels will surely be a boosting reason for the auto components manufacturers
- FDI inflow. The entrance of global OEM's has attracted foreign investment in India. While considering Indian manufacturing quality and cost of production, many global OEMs are making India as their base for component manufacturing for their global plants.
- Increasing exports of Indian models: rising exports of Indian automobiles example, those by Mahindra, Tata Motors etc. have also boosted the brand and consumption of Indian auto components
What has been the real turn-around?
Apart from the already existing and increasing domestic consumption, the major boost has come from the opening up of the trade to foreign investment by the Indian Government, which has attracted global OEM's to set up base in India and partner with many established Indian companies. On the other hand, the auto exports of high end Indian automobiles is also the driving reason for the rel turn-around of events for the Indian auto components industry.
Source: http://www.automotogadgets.com/wp-content/uploads/2010/05/online-used-auto-parts-2.jpg
Analysis of the Indian Auto Component Industry: Strengths
While our team looked at many factors, the major strengths which really came out during our interaction and research of the industry are:
- Cost advantage
- Smart labor while at lower costs, at all levels
- Availability of high end Engineering skills
- Adaptability to new and established quality systems
- Inclusion of Emerging new technology, while taking cues from global manufacturing
The value the global OEMs have really added to the existing Indian Auto components industry is the increase in adoption of high end technology and also the investment into Research and Development, which has provided the much needed boost to come up with innovations which are in-genuine. This has also given the real brand visibility for *made in India* products in global markets.
What are the risks that can adversely affect this sector?
Like any other business, even the auto components sector is dependent on many variables and hence these risks need to be taken care of:
- A global recession can have a direct effect on the consumption of automobiles globally, which will hit the auto components industry
- With the prices of metals and other raw materials fluctuating widely in the market, it affects the strategic direction being taken by auto components and may affect business decisions and hence growth
The production of auto components could grow upto USD 22bn by 2010 and India's exports of auto components could grow to USD 4.5bn (source: D&B).
To know more about your industry and get specialist insights, contact the IndiaMART Knowledge Services team by dropping in a comment to this blog post!
Auto mobile industry in India is going vast. there can be find all type of and good products for your autos. Its true that there are many auto component companies india but i like the one SPX India.
ReplyDeleteAuto industry is growing very fast in India..i like the way you have explained "The Growth"..point here in your this post. i did get good amount of information from here. thanks for sharing this post and keep posting such post here in future too.
ReplyDeleteI am looking for some information related to auto transport carriers. it would be nice if you can share some information related to this here in your future posts..
Thanks,