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INDIA NOW A R&DHUB

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“India is a promising market for many Australian firms,especially in auto sector” 

Kim Carr

Australian Ministerfor innovation

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Growth Drivers

Rising demand for vehicles

Low-cost and high quality standards

Availability of low cost skilled manpower

Policy initiatives - De-regulation and policyinitiatives such as lower excise duties,realisation of value added tax (VAT), etc.,

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Industry Structure

The Indian auto componentindustry is large and highlyfragmented.

400 major players in the autocomponent sector

The original equipment (OE)market is predominantlycatered to by the organisedsector.

The 400 odd organisedproducers contribute around80 per cent to this market

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Exports

Exports around 13 per cent of its output.

In the year 2009-10, the industry exportedgoods worth US$ 3.8 billion.

Exports, which touched US$ 5 billion in 2010-11, are expected to grow by 20-25 per cent in2011-12.

Principal export items include replacementparts, piston rings, gaskets, engine valves, fuelpump nozzles etc.,

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Recent Trends and Investments

Besides low labour costs, India’s process-engineeringexpertise, applied to re-designing of production processes,has resulted in the reduction in manufacturing costs ofcomponents.

Several auto component manufacturers are in the process of

substantially investing in capacity expansion, establishingpartnerships in India and abroad, acquiring companies inforeign countries establishing Greenfield ventures, Research& Development (R&D) facilities and design capabilities.

Japanese car major Toyota has announced an investment ofnearly Rs 1,650 crore (US$ 373.3 million) to increase theproduction capacity of its Indian operations by one lakh unitsand for increasing localisation of components by 2014 .

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Force Motors will enter the passengervehicle segment with the launch of amulti-purpose vehicle (MPV) by 2012, forwhich the company will set up a newfacility in Madhya Pradesh with an initialcapacity of 24,000 units per year.

Auto parts maker MothersonSumiSystems Ltd (MSSL) has announced itsplans to acquire an 80 per cent stake inGermany's Peguform Group from CrossIndustries.

The deal is expected to be closed in 2-3months and will be funded through debtfrom Indian lenders, said VC Sehgal,Vice-Chairman, Motherson Group.

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French tyre-maker Michelin'supcoming India plant in Chennai willproduce its first tyre in November

2012. Michelin is setting up a manufacturing

unit at industrial area in Tiruvallur

district, near Chennai, and would beinvesting Rs 4,000 crore (US$ 904.98million) over a seven-year period.

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Policy Initiatives

The Ministry of Heavy Industries and PublicEnterprises has envisaged the AutomotiveMission Plan (AMP) 2006-2016 to promote

growth in the sector and plan targets to: Increase turnover to US$ 122 billion –US$ 159

billion by 2016 from US$ 34 billion in 2006

Increase export revenue to US$ 35 billion by2016

Provide employment to additional 25 millionpeople by 2016

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