The industry is working on realizing net localization of an additional INR 17,977 crore in the three years to FY25.The Indian automotive industry is poised to achieve its ambitious target of up to INR 25,000 crore (about USD 3 billion) reduction in import value in the five years through this fiscal-year end by accelerating localization of advanced parts such as electric motors, airbags and automatic transmissions, said industry executives.
As per the plan, several projects were initiated to cut parts imports and boost localization by up to 20% from FY20 levels across 11 critical categories including drive transmissions, engines, steering, electronics and electrical parts. These components comprise about 70% of total imports.
Auto and parts makers achieved net localization or gains of localization efforts minus incremental imports due to increase in volumes of INR 7,018 crore in the two years through FY22, as per an assessment on localization programs conducted by industry bodies SIAM (Society of Indian Automobile Manufacturers) and ACMA (Automotive Component Manufacturers Association). The industry is working on realizing net localization of an additional INR 17,977 crore in the three years to FY25.
A reassessment of the localization targets achieved by the domestic automotive industry will be undertaken after March-end, following which fresh targets will be set in consultations between the industry and government to further strengthen local manufacturing of automobiles and auto parts, the executives said. “Value-addition from the Indian auto components industry has gone up significantly in the last couple of years. In the first phase (till FY22), we achieved double the target of attaining localization level at about 6%,” said Shraddha Suri Marwah, President, Acma. “The second phase is underway. The industry is targeting deepening localization by another 15%”.
As much as 28% of total components valued at USD 11 billion were imported in the first half of this fiscal year, largely from China, Japan, South Korea and Germany. Imports during the period rose by 4%. Auto parts exports from the country, though, grew at a faster clip of 7% to USD 11.1 billion between April and September 2024. This included exports to mature markets in North America, Europe and Asia. With annual car sales alone estimated to double to 9-10 million units by the turn of the decade, senior industry executives said component makers are making large investments to boost capacity as well as technological capability.”The moderation in growth rate being seen in vehicle Sales in the country are a temporary blip. There may be some minor delays on part of component makers in mobilizing investments,” said a senior industry executive. who did not wish to be named.
“Investments are planned in expanding physical infrastructure, developing design and technological knowhow and skilling (the workforce) to support future growth.”
Anmol Jain, managing director, Lumax Auto Technologies, said the company is making fresh investments to expand capacity at its Pune facility and to build a new plant in Sanand, Gujarat to meet customer demand.
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