The indigenous auto component industry can emerge as a major global player by supplying spare parts to global automobile companies if it adopts more IT and align their business strategy accordingly, says a new Nasscom survey.

Outsourcing of auto components is going to be major opportunity for Indian players. The global auto component industry is expected to touch US$1.9 trillion by 2015, of which around 40 per cent (approximately $700 million) is expected to be sourced from low income countries like India, it added. 

The Nasscom-commissioned survey – conducted by the Indian Institute of Management (IIM), Bangalore – also proposes the central government to create a technology upgradation fund (TUF) for the auto-component sector for achieving global competitiveness. According to industry estimates, while India’s share in the global auto component trade of $185 billion is only 0.4 per cent at the moment, it has the potential to become one of the top five component economies by 2025.

Global growth

Besides the proposed TUF, funding is also required to train shop floor workers because without skill development the demands from the original equipment manufacturers cannot be met. The business opportunities are enormous as in the next five years 65 per cent of global vehicle growth is going to happen particularly in India and China. 

In the last fiscal, the  industry clocked $15 billion revenue, which is expected to rise to 16.5 billion by 2007-08. The export component in 2006-07 was $2.9 billion that may increase by 15 to 17 per cent in 2007 The industry has a long term goal of generating $40 billion in revenue by 2015.