PROJECT TOPICPROJECT TOPIC

INDUSTRYINDUSTRY

AGENDA…

• STUDY HISTORICAL ASPECT AND CURRENT SITUATION.

• WHERE THE INDIAN INDUSTRY STANDS GLOBALLY?

• STUDY GROWTH POTENTIAL.

• REASONS FOR THE BOOM IN THE INDUSTRY.

• STUDY GOVERNMENT POLICIES.

• MEASURES TO SUSTAIN GROWTH.

HISTORICAL ASPECT… Initially, the Indian Auto Component Industry wasnot competitive enough for the global market due toits:- Inferior quality Lower labour productivity High cost of raw materials Protectionist policies of Indian government Limited demand from vehicle manufacturers

However, a change came after the liberalization of the India economy in 1991 with:

Abolition of licensing Approval given to up to 51% foreign investment

CURRENT ASPECT…1) Indian Auto Component Industry’s turnover in 2006-2007 was US$ 15 billion.

2) The industry is growing fast with a CAGR [COMPOUND ANNUAL GROWTH RATE] of 28.9%.

3) Indian industry has around 500 organized and around 600 unorganized players.

4) In terms of component type, engine parts lead the sales followed by drive transmissions and steering components.

GLOBAL STANDING…• Indian manufacturers are gaining

recognition as “global quality” players.

• India shared 0.9% of the global Auto Components Industry in 2005-06.

• India’s share in world auto components could grow from 0.9% in 2005-06 to over 2.5% by 2015

GLOBAL STANDING…• Many international players including

Delphi, Visteon, Bosch and Meritor have set up operations in India.

• Exports projected to grow at over 30% p.a.

• Over 60% exports are to Europe and USA.

• India is also becoming a global hub for R&D.

Acquisitions made overseas are helping Indian auto component companies get access to new technology and

customers and increase in India’s global presence.

GROWTH POTENTIAL…• India amongst the most competitive manufacturers of auto

components, especially:– Metal intensive components: forgings,stampings,castings.– Skilled labour-intensive components: machining, wiring-

harness etc.– Hi-tech components: electronic fuel injectors.

• Opportunity to address the global Auto Components market while leveraging India’s large and growing domestic market

• Opportunity to set up R&D centres in India– Indian technical skills is acknowledged as among the best

in the world• High level of sourcing of auto components from low cost

countries (LCC’s) to act as a driver for growth.• Potential of over US$5 billion for investment in India.

INVESTMENTS MADE IN INDIA

REASONS FOR BOOM. . .

Increase in incomeIncrease in standard of living.Relaxation of regulation.Reduction of tariffs on imports.

ADVANTAGES TO MANUFACTURERS

Technological, cost and manpower advantage.

Established R&D centers.India among the lowest cost producers of

steel in the world.India is fourth largest passenger car market

in Asia.

MAJOR PLAYERS…Domestic Private Players:Bharat Forge Limited Tata Auto Component Systems Sundaram FastenersBrakes India

International Private Players:MICO Visteon  Delphi 

GOVERNMENT INITIATIVES…

100% FDI [FOREIGN DIRECT INVESTMENT] allowed through the automatic route.

Reduction in the duty of raw material to 5-7.5% from the earlier 10%.

Setting up of R&D Infrastructure Project.Incentives provided to the exporters in terms

of Drawbacks and DEPB [DUTY ENTITLEMENT PASSBOOK SCHEMES] .

MEASURES TO SUSTAIN GROWTH COMPARED TO CHINA

CONSIDERING POINTS:- 1. SETTING UP OF RND CENTRES. 2. REDUCTION IN TAXES. 3. REDUCTION IN POWERCOST. 4. MANUFACTURERS SHOULD WORK

CLOSELY WITH OEMs (original equipment manufacturers). 5. OUTSOURCING & SETTING UP OF

UNITS IN LOW COST MANUFACTURING COUNTRIES

COMPETITIVENESS…

• INDIAN MANUFACTURERS SUFFER FROM A COST DIS-ADVANTAGE.

• INDIAN INDUSTRY STANDS EQUALLY WITH BRAZIL.

• BURDEN OF TAXES IN INDIA IS HIGHER.• POWER COST IN INDIA IS HIGHER AS

COMPARED TO COMPETING COUNTRIES.• HIGH INTEREST RATES.

CONCLUSION…

• Indian auto component industry is one of the largest growing industries in the world.

• Has a huge scope of investment.

• Favorable destination for foreign companies to establish their facilities and form alliances with domestic companies.

SUGGESTION…

Efficiency in supply will be critical for India’s auto component industry’s success.

THANK YOU

SUBMITTED BY:

JASMEET SINGH B-24 NISHITA MAHAJAN B-32

PRANAV NAGPAL B-34

RADHAPRIYA SRIVASTAV B-35 SAKSHI MANAKTALA B-42