Local Battery And Semiconductor Manufacturing Could Widen Scope In The Auto Component Industry: ACMA

The Indian auto industry is the fourth largest auto industry in the world valued at more than $ 222 Billion. It contributes 8 per cent to the country's total export and in-turn accounts for 7.1 per cent of India's GDP. Estimated to become the third largest in the world by 2030, there's no doubting the fact that the industry is cohesively evolving and the changing dynamics in the Indian auto sector, which will lead to opening doors for new entrants.

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Suzuki Motor Corporation's upcoming lithium battery plant in Gujarat and Vedanta along with Foxconn setting up a 1,000-acre semiconductor plant in the same state is expected to widen the scope in the auto component industry. 'Indianisation' or localisation of these new components is likely to make room for new ancillary component makers or even other sectors like the software and electronics industry among others. New players are expected to join the party bringing in more investment and technological advancement in the industry.

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Sharing his views with carandbike, Sunjay Kapur, President - Auto Component Manufacturers Association (ACMA) said, "It's widening the scope of supply which is definitely a positive. With the challenges going electric we also have several opportunities. So as you pointed it out rightly, in terms of batteries and in terms of ecosystem (overall auto component and auto industry), not just the product itself but even the ecosystem requires a supply chain and this opens up a whole new avenue of supplies for both component manufacturers and non-component manufacturers. So we'll see a lot of the competitive landscape change entirely when it comes to the auto component space. So software manufacturers (developers) and electronics, you see very different kind of supply chain and completely different from what we've seen earlier. Again, it's an opportunity that will leverage and I hope that we can leverage successfully."

Even the government has been doing its part to spur the development in the auto component industry, especially when it comes to promoting newer technologies and Advanced Automotive Products (AAT) like battery manufacturing, automation and chip manufacturing among others. For your perspective, Production Linked Incentive (PLI) Scheme for automobile and auto component industry in India attracted a proposed investment of Rs. 74,850 crore against the target investment estimate of Rs. 42,500 crore over a period of five years. In fact, the proposed investment of Rs. 29,834 crore is from the approved component incentive scheme while Rs. 45,016 crore is from approved OEM Incentive Scheme. A total of 115 companies had filed their application under the PLI scheme for automobile and auto component industry in India which was notified in September 2021. A huge part of this investment is likely to happen in adoption and manufacturing of newer technologies. The minimum criteria under the investment scheme is Rs. 250 crore per company. So in five years with 75 companies on board, a minimum investment of over Rs. 18,600 crores is estimated in the auto component sector, primarily in Advanced Automotive Components.

The government approved PLI scheme for automobile and auto component industry in India aims at enhancing India's manufacturing capabilities for Advanced Automotive Products (AAT) with a budgetary outlay of Rs. 25,938 crore. It proposes financial incentives to boost domestic manufacturing of AAT products and attract investments in the automotive manufacturing value chain, in a bid to overcome cost disabilities, creating economies of scale and building a robust supply chain in areas of AAT products.