Automotive Component Manufacturers Association of India (ACMA), has announced the performance review of FY 2020. The auto component industry in India recorded a revenue decline of 11.7 per cent at ₹ 3.49 lakh crore in the last financial year. That said, the aftermarket in FY2020 remained stable despite a downturn in the auto industry at ₹ 69.381 crore, witnessing a marginal growth of 2.8 per cent over the previous year. In the same financial year, the overall vehicle industry witnessed a downturn of 18 per cent.
Exports of auto components witnessed a de-growth of 3.2 per cent to ₹ 1.02 lakh crore in the same period as compared to Rs 1.06 lakh crore exported a year ago. European markets accounting for 30 per cent of exports, saw a decline of 11 percent, while North America and Asia, accounting for 30 per cent and 27 per cent respectively reported flat numbers. Component imports fell by 11.4 per cent to ₹ 1.09 lakh crore in FY20 from ₹ 1.23 lakh crore recorded a year ago. Asia accounted for 65 per cent of imports (down by 7 per cent), followed by Europe at 26 per cent (down by 22 per cent) and North America 8 per cent (down by 17 per cent).
The prevailing coronavirus crisis has led to a 45 days long complete lockdown followed by an intense slowdown in the market. It has taken a toll on the auto component industry as well and ACMA is expected it to impact revenues even further this financial year.
Speaking about the current situation, Deepak Jain, President - ACMA said, "The auto component industry has displayed remarkable resilience in wake of the lockdown; the industry faced acute challenges on the front of working capital, production and dysfunctional logistics. However, with unlocking of economy, growth seems to be returning to the industry with uptick in vehicle consumption especially in the two-wheelers, passenger vehicles and the tractor segments, although sales of commercial vehicles continue to be challenged. The component industry's performance is expected to return to pre-COVID levels by the festive season should the ramp-up be not stymied by lockdowns in manufacturing zones and lack of availability of manpower. Going forward, to allow for uninterrupted production in the automotive value chain, despite local lockdowns, ACMA has recommended to the Government to accord 'continuous production industry' status to the automotive industry".
ACMA continues to recommend a uniform 18 per cent GST rate across the auto component sector. At present 60 per cent of the auto components attract 18 per cent GST rate, while the rest 40 per cent, majority of which are two-wheelers and tractor components, attract 28 per cent. A uniform tax rate will give component makers some cushion to absorb the impact of the downturn.