The total turnover of the automobile component manufacturing companies in India has declined by 11.7 percent to Rs 3.49 lakh crore in financial year 2019-2020 majorly due to prolonged slowdown in the auto sector and the outbreak of Coronavirus.
In FY'19, the revenue of the sector grew by 14.5 percent to Rs 3.95 lakh crore.
According to Deepak Jain, President, ACMA, subdued vehicle demand, investments made for transition from BS-IV to BS-VI, liquidity crunch, lack of clarity on policy for electrification of vehicles and slowdown in key export markets, among others, had an adverse impact on the performance of the components sector in India as also on its expansion plans. All these factors pulled back the domestic auto component industry by almost two years, Jain noted.
Speaking about the current situation, Jain elaborated, “The auto component industry has displayed remarkable resilience in wake of the lockdown; the industry faced acute challenges on the front of working capital, production and dysfunctional logistics."
However with the unlocking of economy, growth seems to be returning to the industry with uptick in vehicle consumption especially in the two-wheelers, passenger vehicles and the tractor segments, although sales of commercial vehicles continue to be challenged, he added.
Jain expects component industry’s performance is expected to return to pre-COVID levels by the festive season should the ramp-up be not stymied by lockdowns in manufacturing zones and lack of availability of manpower.
"Going forward, to allow for uninterrupted production in the automotive value chain, despite local lockdowns, ACMA has recommended to the Government to accord ‘continuous production industry’ status to the automotive industry," Jain added.
The exports of automotive component industry, which account for about 19 percent of the total industry revenue, declined 3.2 percent to Rs 1.02 lakh crore in 2019-20 from Rs 1.06 lakh crore in 2018-19.
While engine, transmission and steering parts continue to account for more than half of all components (52 percent) exports from India, the exports of electricals and electronics saw sharp 22 percent growth in the last fiscal.
Imports also witnessed 11.4 percent decline to Rs 1.09 lakh crore during the year under review from Rs 1.23 lakh crore in 2018-19. "Asia accounted for 65 percent of imports followed by Europe and North America at 26 percent and 8 percent respectively. Imports from Asia declined by 7 percent, while those from Europe by 22 per cent and from North America by 17 percent," ACMA said.