Sentiment is positive for auto parts sector: ACMA

The Automotive Component Manufacturers Association of India (ACMA) sees the situation improving for the industry in the coming months. This comes after a difficult 2020 due to the Covid-19 pandemic.

“Going forward, the sentiment remains very positive. There is concern on raw material availability as well as the recent commodity price escalations. But we are hopeful that as the unlock continues to prevail, there will be rural and urban demand. There is also hope that going into 2021-22, there will be vaccination alternatives available within the country as well and will boost consumer and supplier sentiments. There will be a spate of recoveries in the next financial year,” said Deepak Jain, President, ACMA.

The ACMA announced that the Indian auto component industry clocked a turnover of Rs 1.19 lakh crore, a de-growth of 34 per cent in first half of 2020-21. Exports were at Rs 39,003 crore, a decrease by 23.6 per cent. Imports were at Rs 37,710 crore, a decrease by 32.7 per cent.

“In H1, the industry decline is 34 per cent but that is primarily due to the Q1 lockdown. In Q2, we actually did see a recovery. As we are in Q3, we have seen some strong numbers.

“In October, at least for the ancillaries, we saw some of the highest numbers because all the segments were prepared for the festive season. Basically, there was a lot of pull from the customer,” he added.

Jain said that there will be contraction in the near future. “Going forward this year as well, because of the lockdown and challenges we continue to face, we will have double-digit contraction. We have contracted 34 per cent as an industry in H1. Although we are optimistic about the H2 performance, we will not be able to completely recover from the Q1 and Q2 fiasco. The question here is how strong and sustainable will the recovery be," he stated.

Replying to another question about cost escalation and semiconductor shortage, Jain said: “Definitely for us, the concern is escalation in cost, be it in metals or polymers. We see it across the chain. Also, there is the semiconductor issue. The lockdown has also seen a rise in consumer electronics. For auto electronics, if you see in global terms, the demand is still minuscule as compared to other consumer electronics.

“There is a lot of intricate dependency on supply chains. It is too early to give out numbers in terms of impact. But we do feel that in terms of demand, it is still there, and it is robust and sustainable. But there could be headwinds in Q4 and we will grapple with it when it comes.

“The semiconductor supply issue is a global one. Certain members of ACMA are facing a shortage. They are working very strongly with OEMs,” he added.

Regarding help from the government to boost the sector, Jain said: “There are certain interventions we always want from the government. We have actually stopped talking about the GST and scrappage policy now because whenever we have a dialogue with the government, I think it is on the agenda.

“We understand that there is a massive revenue deficit also and the auto sector, the way they have actually put in the allocation on the sector through the PLI scheme, the sector has got the largest allocation.

“Also, recently I understand that there was a parliamentary standing committee report that has come out to suggest on refocus on the sector. I believe they have also talked about GST interventions there. Obviously, the government is aware of the importance and potential of the sector,” he informed.