Free Essays for Competitive Exams-Auto Component Industry–Ready for the Transition

Auto Component Industry – Ready for the Transition

The Government is soon going to launch the 12^th Five Year Plan.  It is reviewing the targets set in the Automotive Mission Plan (2006-16).  Based on the planned trajectory, the size of the auto component industry is expected to be Rs. 2.48 lakh crore (USD 54.6 billion) by 2016-17, the terminal year of the Twelfth Five Year Plan.  This would mean huge opportunities in investment, production, exports and employment creation across the country.

The Automotive Mission Plan (AMP) 2006-2016 of the Ministry of Heavy Industries & Public Enterprises, scripted in partnership with the industry, envisaged that the output of automobiles and auto components industry would reach a level of USD 145 billion in 2016 accounting for more than 10% of GDP; of this, it was expected that the auto component industry would contribute USD 40 billion, thus generating additional employment for 1 million people.

To achieve these targets that some urgent and timely interventions need to be done by the Government.  However, there has to be proactive action on the part of industry so as to ensure success, competitiveness and sustainability, coupled with organizational change and improvement.  In this regard, there are some imperatives for the Auto Component Industry in India in a changing environment; for example, the Indian component manufacturers will need to move up the value chain to retain their competitive position as they are competing in the lower value-added space and produce parts/components. Even relatively larger component manufacturers depend on either the OEMs or on their JV partners for technical/product design capabilities.  This has to change and even SMEs have to invest in greater product and process improvement through meaningful R&D.

Product design, testing and validation capabilities are expected to become even more important as OEMs rely more on their suppliers for product design.  This need is driven by shortening product life cycles, introduction of new products/variants and increasing localization.  R&D capabilities in Indian component industry need to be necessarily established at the earliest.

As per the current trends, the growth of the domestic component industry has been accompanied by a corresponding growth of component imports into India.  Imports, at Rs. 38,760 crore, comprised almost 18% of the domestic demand in 2010-2011.  In this background of the strong auto components market in India, the industry has to work towards creating capacity ahead of demand.

Creation of capacities is not only vital for lowering the country’s import bill, but, this will become an enabler for the country wishing to improve exports prospects through bilateral routes and bilateral and regional FTAs.  The auto component industry needs to explore markets and make strategic decisions based on these FTAs.  Further, each company needs to draw up a roadmap for skilling of its workforce to complement the formal efforts that have been made by the industry in setting up the Automotive Sector Skills Council as this lone effort by itself will not be adequate.

The National Electric Mobility Mission Plan 2020 has now been unveiled last week in the first meeting of the National Council for Electric Mobility.  This will open a new vista of growth for the auto components industry and pave the way for greater indigenization of electric and hybrid vehicles. The auto component industry has to gear up as this exciting opportunity awaits them.

This industry is no stranger to change.  The auto component industry is ready for a change, for a better future.  It has thrived to be a part of growing manufacturing sector that is closely integrated into the global market and its’ supply chain.