Auto component industry registers degrowth of three per cent

The turnover of the automotive component industry in India stood at Rs 3.40 lakh crore for the period April 2020 to March 2021, registering a degrowth of three per cent over the previous year, the Automotive Component Manufacturers Association of India (ACMA), the apex body representing India’s auto component manufacturing industry, on Tuesday announced in its review of for the fiscal year 2020-21.

Vinnie Mehta, Director General, ACMA said, “The vehicle industry in India witnessed two successive years of de-growth of 14.6 per cent in FY19-20 and thereafter of 13.6 per cent in FY20-21. The economic slowdown of FY19-20 was compounded by the challenges of a pandemic led national lockdown in FY20-21 resulting in decline in vehicle production and consumption.

“While the first quarter of FY20-21 was a complete washout, the industry regained significant ground second quarter onwards. The component industry, in tandem, posted a subdued performance in FY20-21 with degrowth of three per cent over the previous year, registering a turnover of Rs 3.4 lakh crore. In the domestic market, auto component sales to OEMs at Rs 2.79 lakh crore declined by three per cent while the aftermarket at Rs 64,524 crore declined by seven per cent. Exports and imports stood at Rs 0.98 lakh crore and Rs 1.02 lakh crore respectively, thus reducing the trade balance to USD 500 million, the lowest ever; exports declined by eight per cent while imports by 11 per cent,” he added.

Deepak Jain, President, ACMA said, “The automotive value-chain faced significant disruptions in FY20-21. The nationwide lockdown in wake of the pandemic, one of the severest in the world, put the entire supply chain in a disarray. The entire industry took significant time to stabilise again post the gradual unlocking of the economy.

“While vehicle sales and production improved quarter-on-quarter from second quarter of FY20-21 onwards, the first quarter of FY21-22 was once again confronted with another round of disruptions due to the second wave of the pandemic. While this wave was a much severe humanitarian crisis, the lockdowns, however, were regional, in line with the Government’s ethos of ‘Lives and Livelihoods’ resulting in lesser adverse impact on economy and production.

“In this environment of volatility, despite disruption of production in supply chain, the industry displayed remarkable resilience and evolved in a spirit of collaboration. Whilst the OEMs gave consistent direction and visibility, the component industry supported well in ensuring smooth ramp-up and business continuity. It is also noteworthy that despite several challenges, many ACMA members undertook relief measures by setting up hospitals and oxygen camps, donating ventilators and concentrators, and contributing generously towards community service,” Jain added.

ACMA added that on the policy front, ACMA is grateful to the government for the recent announcement of the Production Linked Incentive (PLI) scheme for the ACC battery storage, which is a right step towards creating a holistic ecosystem for manufacturing and sustaining of electric mobility in the country. That apart, while the PLI scheme for auto and auto component industry has been announced, the industry awaits its finer details.

The PLI scheme for auto and auto components is expected to create an export competitive auto component industry as also give a thrust to its localisation. The industry is also keen on an early announcement of the details of the RODEPT (Remission of Duties and Taxes on Export Products) scheme, that will refund embedded taxes and duties, previously non-recoverable, to make component exports price competitive.