India's Auto-Component Manufacturing Sector Set To Double By 2030: Niti Aayog

(MENAFN- KNN India) New Delhi, Apr 14 (KNN) India's auto-component manufacturing industry is projected to double from USD 70 billion in 2022 to USD 145 billion by 2030, according to a new report published by Niti Aayog.

The government think tank also forecasts component exports to treble to USD 60 billion by 2030 from the current USD 20 billion.

"This growth would position India as a formidable player in global markets, achieving a trade surplus of USD 25 billion and increasing its share in the global value chain (GVC) of auto components from 3 per cent to 8 per cent," the report states.

To realise this ambitious growth trajectory, the report outlines comprehensive interventions across multiple domains.

It recommends fiscal measures including operational expenditure support to scale up manufacturing, with particular emphasis on capital expenditure assistance for tooling and die development, intellectual property transfer, and branding support, all of which are deemed crucial for automotive component manufacturing advancement.

The report highlights the importance of cluster development to strengthen supply chains, noting that most manufacturing supply chains worldwide are concentrated in clusters.

This approach would reduce logistics costs and establish common research and development and testing facilities, thereby accelerating product development.

Additionally, the report emphasises skill development initiatives as essential for ensuring a steady pipeline of talent to drive sectoral growth.

On the non-fiscal front, the report suggests interventions such as business improvement support to enhance global competitiveness, encouragement of joint ventures and free trade agreements to foster international collaboration and market access, and adoption of Industry 4.0 and enhanced quality standards to improve manufacturing efficiency.

These initiatives are considered vital to positioning India as a key global player in the automotive component sector.

"These policy measures, if effectively implemented, will be crucial in enabling India to scale up its automotive component production, increase exports, and strengthen its standing in global markets," the report concludes.

Despite the positive outlook, the report acknowledges that India's automotive component manufacturing sector currently faces a cumulative cost disability of nearly 10 per cent compared to China, making it less competitive in the global market.

It notes that despite advantages in areas such as labour, fuel, and power costs, structural inefficiencies make India a less attractive investment destination for automotive component manufacturing, limiting its ability to compete globally.

(KNN Bureau)

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