India’s auto component industry targets $100 bn in exports

The domestic auto components industry is targeting $100 billion in exports by focusing on the US and European markets, according to a joint report by Boston Consulting Group and the Auto Component Manufacturers Association of India (ACMA).

Titled as, “Revving Up Exports: The Next Phase of Export Growth for the Auto Component Industry,” the report highlights that by doubling down on classical components, India can potentially add another $40-60 billion in incremental exports by prioritising 11 product families, with focus on the US and Europe markets.

In FY24, India's auto component exports reached $21.2 billion, marking a significant turnaround from a $2.5 billion deficit in FY19 to a $300 million surplus.

“We have not only achieved a positive trade balance, but for auto-specific use cases, the surplus is even more pronounced, reaching approximately $0.5-1.5 billion. We are committed to sustaining this growth trajectory and have set an ambitious target of $100 Bn in exports ahead,” says Shraddha Suri Marwah, President, ACMA.

According to the report, by capitalising on emerging electric vehicle & electronic value chains through localisation, India can look to tap into an additional $15-20 billion exports in components such as battery management systems, telematics units, instrument clusters, ABS.

Global auto component trade currently stands at $1.2 trillion, with the US and Europe as top importers. India's export share in North America and Europe is around approximately 4.5%, presenting massive headroom for expansion, says the report.

Global OEMs are major customers of India's auto component industry, accounting for 20-30% of exports, as per the report. In terms of cost competitiveness, India emerges as a cost-effective alternative in Germany by offering components at prices up to 15% lower. Notably, the German market is predominantly influenced by the Eastern European markets.

In the US market, which is dominated by imports from Mexico and China at present, Mexico offers components at 2-5% lower prices due to reduced logistics and tariff costs. Conversely, Chinese components are 20-25% more expensive vis-à-vis India, largely because of additional tariffs.

"As geopolitical dynamics evolve, Global OEMs are reassessing their supply chains and manufacturing strategies, presenting India with an optimal opportunity to establish itself as a top destination for global OEMs and Tier 1s. Encouraging 2-3 global OEMs to establish manufacturing bases in India can serve as an anchor – helping the domestic auto component players to gain a deeper understanding of global OEM requirements, integrate more seamlessly into their supply chains, and enhance India’s position in the global auto component market,” says Vikram Janakiraman, Managing Director and Senior Partner at BCG.