Business
Global competition hits auto components units
By Sushma Ramachandran
NEW DELHI Nov. 30. The domestic automotive components industry is trying to avert the threat of closure posed by growing international competition by improving productivity, efficiency and quality levels.
The Automotive Component Manufacturers Association (ACMA) is therefore doing its best to ensure that small and medium enterprises are able to survive in the new liberalised environment by carrying out awareness seminars, providing expert advice on improving quality levels and promoting exports through trade fairs and exhibitions abroad.
According to the ACMA Vice President, Mr. Deep Kapuria, the competition is tough in the domestic market with the entry of giant multinationals as well as easier imports. Existing small and medium companies are scrambling to cope with the standards now being demanded from vehicle manufacturers.
Mr. Kapuria who is also managing director of Hi Tech Gears, an auto component producer, told The Hindu that the entry of multinationals into the Brazil and Mexican markets had led to closure of numerous indigenous units in these countries. Having studied the experience of these countries, he said ACMA is trying to ensure that liberalisation and entry of foreign players does not impact on the domestic industry.
He pointed out that leading multinational auto component producers like Delphi, Visteon and Denso have a combined turnover of 22 billion dollars. In contrast, most component manufacturers in this country are small and medium enterprises (SMEs).
In fact, 60 per cent of ACMA's 400 members are SMEs. Worried about the prospects of easier imports and reduced tariffs on components, the industry is responding positively to ACMA's plans to improve shopfloor practices by carrying out workshops in collaboration with UNIDO, the Confederation of Indian Industry (CII) and the central government. Experts from Germany and Japan are brought in to advise companies on ways to improve performance.
Mr. Kapuria noted that global giants like Delphi are largely seeking to make India an export base to supply components to the Asean countries or China. ``They are seeking depth rather than width in terms of components manufacture'', he said. These companies would prefer to focus on producing selected components in large volumes for export to the neighbouring regions, he explained. Despite the competition, however, Indian auto component companies are rapidly making a dent in the export market. He said exports are now about 400 million dollars annually but expert studies have forecast that these will rise to one billion dollars over the next three years.
He pointed out that improving technology levels was critical to achieving these targets. As it is, most producers here are ``tier two'' suppliers. In other words, they supply small parts to other larger component producers who in turn sell sub-assemblies and assemblies to the original vehicle companies. But with the entry of more sophisticated technologies, automobile manufacturers are now seeking to purchase ``systems'' rather than assembled components from their ancillary suppliers. For instance, engine management systems are now being sought rather than merely engines.
Mr. Kapuria said ACMA is making strenuous efforts to ensure that domestic industry is able improve technologies to meet this new demand.
An entry has also been made into e-commerce by selling components on the internet through auctions. Though this has begun in a small way, he said it will increase gradually as e-business expands globally.
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