According to a research by the Indian government and the leading industry group Automotive Component Manufacturers Association of India (ACMA), China provides a USD 20 billion market for Made in India automotive components, of which there is an approximate USD 7.5 billion “addressable opportunity.”
Due to the sustained sharp increase in Chinese imports relative to Indian exports, the record deficit of $35 billion in 2013 decreased from $40 billion in 2012.
A recent research entitled “Export Opportunities for Made-in-India Auto Components for China” was undertaken by ACMA. Avalon Consulting performed the study, which was partially funded by the Ministry of Commerce of the Government of India. Its goals included analysing consumer behaviour, market dynamics, and the competitiveness of Chinese car component producers. determining whether entering the Chinese market is feasible.
The paper outlines specific export potential for car components to particular Chinese OEMs, valued at USD 20 billion. The paper was created following a thorough review of macroeconomic and trade statistics, research in China and India, and several discussions with Chinese and Indian automakers and suppliers of auto parts.
“I am glad that ACMA and its members have overcome the apprehension that India cannot be competitive vis-à-vis China and have identified it as a target market,” stated Arvind Mehta, Joint Secretary, Department of Commerce, Ministry of Commerce & Industry, Government of India, during the event. This initiative will be a step in the right direction towards reducing the enormous trade gap between China and India.
Speaking about the “Auto component is one of India’s traditional export strengths, but India’s trade deficit in auto components with China has also grown substantially,” stated Vinnie Mehta, Director General of ACMA, in the report.
In addition, he said, “China’s exports of auto components to India were USD 2.6 billion in 2013–14, compared to India’s USD 300 million, and this pattern hasn’t changed in the last three or four years. The possibility for Indian auto component makers to explore the Chinese market is positive due to rising labour costs in China, increased design capabilities, and value addition by Indian car component manufacturers.
A delegation of ten CEOs was organised by ACMA earlier this year and travelled to China to interact with the country’s automotive industry. The delegations interacted with Global and over the four days. Chinese OEMs, Chinese component manufacturers, government officials and local industry bodies to update them on the growing capabilities of the Indian auto component industry, as well, as further business engagements between the two countries.
Some of the key highlights from the report are:
· Export opportunity for ‘Made in India’ components has been estimated at USD 20 billion, of this, the ‘addressable opportunity’ is about USD 7.5 billion.
· Components such as pistons, con rods and other small engine hardware, cam and crankshafts, lighting and signalling equipment, shock absorbers etc. feature in the ‘addressable opportunity’ list.
· Some of the Chinese OEMs ( Lifan – Two wheelers; Beiqi Foton – Commercial Vehicles , Great Wall – Passenger Car , WeiChai – Engine manufacturer ) have evinced keen interest in made in India products.