Centre to finance small auto parts companies

“My ministry is examining the feasibility of having a separate scheme which can facilitate financing to the sector,”the Minister of Heavy Industries and Public Enterprises, Vilasrao Deshmukh, said here.
SMEs have rarely had the means or the ability to raise the required resources on their own and hence his ministry was considering such a scheme, he added. He was addressing the Golden Jubilee Inaugural Session of the Automotive Component Manufacturers Association of India (ACMA) in New Delhi. Expressing concern over slow growth in auto component exports, the minister stressed on bigger efforts to increase the exports and global outsourcing by making use of various measures to boost exports, announced in the recent Foreign Trade Policy.

The minister urged the industrialists to develop sustainable competitive advantage for the sector through greater investments in more efficient plant and machinery technologies, skill upgradation of employees and through adoption of latest efficient manufacturing processes. With pressure mounting on auto industries to produce small and compact fuel efficiency vehicles to reduce the impact of climate change, Indian auto component manufacturers also should upgrade their technology to get a piece of the pie in emerging areas, he said.
The minister said that the government is also planning to set up an automobile design institute. This would be a common facility for all manufacturers, he added.
As the Indian auto component sector comprises mostly of small and medium units, their key challenge of the industry is to raise required resources on its own. The sector is also facing competition domestically from cheap imports and its exports, which constitute around 20 per cent of the sector’s turnover, remain a matter of concern.    

In 2008-09, the auto components exports grew by 6 per cent as compared to the Compound Annual Growth Rate (CAGR) of growth of about 25 per cent for the period 2003-07. The Indian automotive and auto component industry posted a positive growth of 3 per cent and 6 per cent respectively in the last fiscal.