Auto part industry growth to slow down at 12-15% in FY12

Indian auto component industry is expecting a slowdown in growth to 12-15% in 2011-12 from over 34% in the previous fiscal, Automotive Component Manufacturers Association of India said today.

Notwithstanding this slowdown, the industry is likely to see an investment of about USD 3 billion during the fiscal to enhance capacities across the country.
"The first quarter of 2011-12 witnessed some slowdown in vehicle consumption in India and this seems to suggest the growth in the auto component industry in the current fiscal will be in the range of 12-15%," Automotive Component Manufacturers Association (ACMA) President Srivats Ram told reporters here.
The component industry had witnessed a growth of 34.2% in last fiscal, taking its total turnover to USD 39.9 billion (about Rs 1,82,127 crore), he added.
"The exports also grew at a very healthy rate of 54% to USD 5.2 billion (last fiscal). Looking at the US and Europe, this rate is also expected to come down to around 20-25%," Ram said.
He, however, said ACMA is very bullish on the market performance in the long-term as it is expecting a compound annual growth rate of 14% for the next 3-5 years.
When asked about the investment the components player may put in in this fiscal, Ram said: "We are expecting about USD 3 billion investment during this fiscal to enhance capacity".
The auto component industry had spent USD 2-2.25 billion on several greenfield and brownfield capacity addition projects in 2010-11, he added.
Talking about imports, ACMA Vice-President Arvind Kapur said: "The imports of components rose by over 30% in last fiscal and this is not a healthy sign. We are now even talking about more FTAs with various countries and this is not a level playing field".
If simple assembly of vehicles are encouraged in the country than complete manufacturing, then it will affect domestic component makers, he added.
On Duty Entitlement Passbook Scheme (DEPB), that incentivises exports through tax rebates, Ram said: "It is a very useful scheme for us. As there is no alternative and given the global market condition, we want the validity of the DEPB scheme to be extended beyond September this year".