Towards a Bright Future

Nirmal K Minda, President, Automotive Component Manufacturers Association (ACMA), and Chairman & Managing Director, Minda Industries, sheds light on the highly upbeat Indian Automobile and Auto Component sector which is making its mark globally. He supports the case with heartening figures and stresses on the need to harness the opportunities around electric vehicles and associated technologies. A highly edifying read…

What’s your observation on the growth of the Indian Auto Component Industry from a global perspective?

The export performance of the Indian Auto Component industry in the first three quarters i.e. in April-December 2017 has been fairly robust, the industry exported components worth $ 9 billion, growing 22 percent. Our exports to the US and Europe, which account for over a third of our exports, have witnessed steep growth at 32 percent and 15 percent respectively. This is indeed very heartening.

It is pertinent to note that this growth has been on the back of somewhat sluggish global automotive market. According to Organisation Internationale des Constructeurs d’Automobiles (OICA) in CY 2017, the global production of vehicles grew by 2.4 percent over CY 2016, which recorded 4.5 percent growth. Major countries such as Germany, the US, the UK have shown a negative growth in vehicle production. Going forward, sustaining growth could be a challenge should the sombre mood continue.

On the domestic front, Society of Indian Automobile Manufactures (SIAM) recently released the vehicle production figures for April 2017-January 2018, which are extremely promising. The total vehicle production remained buoyant with 26.4 million units growing 14.41 percent; this augurs well for the
component industry.

Do you feel that by 2020 India will be the fourth largest automobile producer globally?

We have recently overtaken Germany and are already the fourth largest vehicle producer in the world. In fact, India is all set to become the
third largest vehicle manufacturer in the world with 7 million vehicles in production by 2020, surpassing Japan and leaving only China and the US ahead of it.

This growth has been possible due to a fast growing economy, adequate financing availability, decreasing unemployment, increasing disposable incomes, and rising consumer expectations. Today, the Indian component manufacturers are well equipped to provide solutions and adapt to changing industrial dynamics and support their customers well.

Please share your views on the implications of Budget 2018 on the auto component sector.

The Budget has been pro-manufacturing and the component sector is delighted that the duty on select items such as engine & transmission parts, brakes, suspension, gear boxes, airbags and parts thereof have been enhanced from 7.5/10 percent to
15 percent. These items account for more than 50 percent of the $ 43.5 billion domestic component industry’s turnover and over 30 percent of its $ 11 billion exports. The industry is extremely competitive in these areas and this measure will not only encourage investments, but also encourage technology development. Further, reduction in corporate tax to 25 percent for SMEs with turnover of up to ` 250 crore is yet another welcome step, as over 80 percent of the companies engaged in the auto component manufacturing are SMEs. That apart, simplification of procedure for credit availability through online-system for SMEs was much appreciated.

With the focus of the Indian automobile industry shifting towards electric vehicles (EVs), what kind of impact do you anticipate on the Auto Component sector and how is the sector gearing up to align with the new trends?

ACMA appreciates the drive of the Government to promote electric mobility in the country. The opportunities around electric vehicles and associated technologies are immense. However, the industry needs to be prepared to harness them. It is critical that the government encourages localization through supportive policies (land, financing, capability development, R&D tax benefit etc.) and through allocation of significant funding towards indigenous R&D for creation of standard battery, motors and other components of powertrain, ensuring creation of local IP. A clear roadmap and a definite timeline by the government is necessary for automotive components industry to help individual auto players to create their distinct roadmap and allow the component sector to create capacities and indigenous solutions accordingly.

We at ACMA believe that there should be coexistence of multiple technologies for xEVs, as is the case in other countries be it Europe or Japan or the US or even China. This is because the battery technology is still evolving and eventually market forces will decide the best fit; the technological progression need not be disruptive but evolutionary to allow for the local industry
to graduate.

What are your views on the capability of the Indian machine tool industry in terms of supplying customized machinery required for manufacturing auto components of global standard?

Newer manufacturing technology requirements by Automotive Components industry would necessitate up-scaling of capabilities and standards in the Machine Tool sector.

The Machine Tool industry needs to adopt environment-friendly technologies and practices as the world moves towards Green Manufacturing. Issues of safety are critical to the work environment and should not be lost sight of.

Qualitative improvements also need urgent attention which many a time are found lacking, because of which many component manufacturers resort to import of high-precision, high-productive machines. In this context, I am happy to mention that ACMA and Indian Machine Tool Manufacturers’ Association (IMTMA) are jointly working to develop a roadmap to fast track improvements in the Indian Machine Tool sector. These include: improving reliability of peripherals; conducting detailed machine performance benchmarking; and a joint cooperative development of new machines.

Further, I am given to understand that over 65 percent of the total requirement of the machine tools in the country is met through imports. This is indeed a very large number and a ripe case for indigenizing machine tool manufacturing in India to support the growing demand for machine tools in the auto and auto components industry.

HIGHLIGHT :Newer manufacturing technology requirements by Automotive Components Industry would necessitate up-scaling of capabilities and standards in the Machine Tool sector.