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Indian auto component makers to focus on export
Monday, 02 September 2002, 19:30 IST
NEW DELHI: A leading Indian automobile component makers' association Monday urged its members to focus on exploring new markets for export to offset the slowdown in the domestic market.
"The last one year has once again brought to the fore the importance of exports for auto component companies," said K. Kejriwal, president of the Automotive Component Manufacturers Association of India (ACMA).
"Companies that have had a high ratio of exports to their total production have once again secured better bottom lines and higher levels of profitability," Kejriwal told an industry conference here.
"A 30 percent to 35 percent ratio of exports to total output can impart certain robustness to the business cycle and result in a much higher profitability for the companies."
The Indian component industry can explore export opportunities in developing countries like Iran, Egypt, Uzbekistan and Nigeria, Kejriwal said.
According to him, sharing technology with other countries and setting up manufacturing operations abroad can change the industry's mindset from a domestic to a global one.
"This can also improve the global earnings and the global presence of the Indian component industry. While a modest beginning has been made with some domestic component manufacturers seriously looking at technology tie-ups abroad, there is a large potential for all of us to share our technological strengths through international joint ventures."
During 2000-01, the exports of components increased from 
18.27 billion in the previous year to 27.05 billion. The industry plans to achieve the $1 billion export target by 2005.
Kejriwal said notwithstanding the annual fluctuations over the last five years, today the Indian automotive component industry has grown to a size of almost 200 billion in turnover, with 107 billion of investment.
"The way the automotive industry has behaved during the last 12 months is probably a precursor to what we will continue to see in the future years. The years when we saw 30 percent plus growth in almost all segments of the vehicle industry in the past will probably remain as fond memories of the good days. The writing on the wall is now clear.
"We are entering an era that will see much more moderate, though a more sustainable level of growth. Coupled with the moderate levels of growth, we shall continue to feel the heat of competition."
He said the price squeeze that has been felt by the component manufacturers during the last few months does not seem to be a temporary phenomenon and is unlikely to let up in the near future.
Kejriwal said lower cost alone would not give Indian companies a sustainable competitive edge.
"In addition to a cost advantage, what we need is technological and design competence, manufacturing excellence and much shorter response time for new product development.
"These are the qualities that will become the cutting edge of competitiveness for us in future and will enable us to also get more value back from our customers that will contribute to a higher level of profitability."
Source: IANS
18.27 billion in the previous year to 27.05 billion. The industry plans to achieve the $1 billion export target by 2005.
Kejriwal said notwithstanding the annual fluctuations over the last five years, today the Indian automotive component industry has grown to a size of almost 200 billion in turnover, with 107 billion of investment.
"The way the automotive industry has behaved during the last 12 months is probably a precursor to what we will continue to see in the future years. The years when we saw 30 percent plus growth in almost all segments of the vehicle industry in the past will probably remain as fond memories of the good days. The writing on the wall is now clear.
"We are entering an era that will see much more moderate, though a more sustainable level of growth. Coupled with the moderate levels of growth, we shall continue to feel the heat of competition."
He said the price squeeze that has been felt by the component manufacturers during the last few months does not seem to be a temporary phenomenon and is unlikely to let up in the near future.
Kejriwal said lower cost alone would not give Indian companies a sustainable competitive edge.
"In addition to a cost advantage, what we need is technological and design competence, manufacturing excellence and much shorter response time for new product development.
"These are the qualities that will become the cutting edge of competitiveness for us in future and will enable us to also get more value back from our customers that will contribute to a higher level of profitability."
Source: IANS