Export of Auto Components from India

[YAGAY andSUN]

Introduction:

India is one of the largest exporters of automotive components globally, playing a crucial role in the global automotive supply chain. With its growing automotive manufacturing industry, India has become a hub for producing high-quality auto components. The export of auto components from India has been increasing steadily, thanks to the country’s competitive manufacturing costs, large-scale production capabilities, and skilled labor. The Indian auto component industry is diverse, ranging from mechanical and electrical components to advanced technology parts used in modern vehicles.

Definition of Auto Components:

Auto components are individual parts or assemblies that make up the various systems and sub-systems in a vehicle. These components are essential for the functioning of the vehicle, contributing to its safety, performance, and comfort. Auto components include:

• Engine parts: Crankshafts, camshafts, pistons, valves, cylinder heads, etc.
• Transmission parts: Gearboxes, clutches, shafts, etc.
• Chassis parts: Suspension systems, axles, brakes, etc.
• Electrical parts: Batteries, alternators, wiring harnesses, sensors, etc.
• Body parts: Doors, bumpers, windows, mirrors, etc.
• Interior parts: Seats, dashboards, steering wheels, etc.
• Aftermarket parts: Replacement parts and accessories.

Key Components of the Auto Components Sector:

1. Engine Components: Critical for the performance of the vehicle’s engine, including pistons, camshafts, crankshafts, and cylinder heads.
2. Chassis and Suspension: These components ensure the structural integrity and stability of the vehicle, such as axles, brakes, suspension systems, and steering mechanisms.
3. Electrical and Electronics: Parts like sensors, wiring harnesses, alternators, lighting systems, and batteries, which are essential for modern vehicles' functioning.
4. Transmission Systems: Components involved in transferring engine power to the wheels, such as gearboxes, clutch systems, and drive shafts.
5. Aftermarket Parts: These parts include spare components, accessories, and replacement parts for vehicles after their initial sale.

How Auto Components Work:

• Engine Components: Work together to convert fuel into energy to power the vehicle’s movement.
• Transmission Components: Allow for the conversion of engine power into torque for the wheels to rotate.
• Chassis & Suspension: Provide structural support and ensure a smooth ride, absorbing road irregularities.
• Electrical Systems: Control various vehicle functions, including lighting, infotainment, and safety features (e.g., airbags, sensors).
• Brakes: Slow down or stop the vehicle by converting kinetic energy into heat energy.
• Interior Components: Enhance the comfort and user experience inside the vehicle, including seating, dashboards, and controls.

HSN Code:

The Harmonized System (HS) code for automotive components falls under the broader category of:

• HSN Code 8708: Parts and accessories of motor vehicles. This includes a wide range of auto components like engines, transmissions, body parts, and electrical components.

Manufacturers in India:

India is home to many auto component manufacturers, both large and small, producing high-quality components for domestic and international markets. Prominent manufacturers include:

• Bosch India: A global leader in automotive components, producing a wide range of products, including fuel systems, sensors, and braking systems.
• Schaeffler India: A key player in producing engine, transmission, and chassis components, such as bearings and clutches.
• Mahindra & Mahindra Ltd.: A leading manufacturer of automotive parts and accessories.
• Indian Oil Corporation: Provides high-quality lubricants and fuel components for vehicles.
• Amtek Auto Ltd.: Specializes in producing automotive components like engine parts, suspension parts, and transmission parts.
• Motherson Sumi Systems Ltd.: A leading supplier of electrical and wiring harnesses for the automotive sector.

Export Destinations:

India exports auto components to a wide range of global markets. The key destinations for Indian auto components include:

• United States: A major market for both OEM (Original Equipment Manufacturer) parts and aftermarket auto components.
• European Union: Countries like Germany, the UK, France, and Italy import a significant amount of Indian auto components, especially for their automotive industries.
• Asia-Pacific: Countries like Japan, South Korea, Thailand, and Indonesia import a variety of auto parts due to the strong automotive sector in the region.
• Africa: South Africa and other African countries represent growing markets for auto parts, particularly for aftersales and replacements.
• Middle East: GCC countries like Saudi Arabia, UAE, and Kuwait import a wide range of auto components for their booming automotive markets.

Export Performance:

India's export of auto components has been increasing consistently due to factors such as:

• Quality and Cost Competitiveness: Indian auto component manufacturers provide cost-effective solutions while meeting international quality standards.
• Growing Demand for Spare Parts: The increase in vehicle ownership globally drives demand for replacement parts and aftermarket components.
• Manufacturing Capabilities: India has a robust manufacturing infrastructure that caters to the growing global demand for auto components.
• Skilled Workforce: India's automotive sector is known for its skilled workforce, capable of producing high-quality and technologically advanced auto components.

Export Incentives:

The Indian government offers various export incentives to promote the export of auto components, including:

1. Advance Authorization (AA): Allows the import of raw materials and components at zero duty for the purpose of export.
2. Export Promotion Capital Goods (EPCG): Offers duty exemptions on capital goods for production meant for exports.
3. Duty Drawback: Refund of duties paid on raw materials used in the production of export goods.
4. Remission of Duties and Taxes on Export Products (RODTEP): Provides relief from indirect taxes and levies on export products.
5. Market Access Initiative (MAI): Supports promotional activities and market research to help Indian exporters access new markets.
6. Interest Equalization Scheme: Provides interest subsidies on export financing to improve competitiveness.
7. Export Credit Guarantee Corporation of India (ECGC): Provides export credit insurance to mitigate the risks of non-payment.

Governing Bodies, Export Promotion Councils, and Trade Organizations:

• Automotive Component Manufacturers Association of India (ACMA): The apex body representing the interests of automotive component manufacturers in India.
• Federation of Indian Export Organizations (FIEO): A key body that helps Indian exporters, including those in the auto components sector, to access international markets.
• Ministry of Commerce & Industry: Responsible for formulating export policies and regulations.
• International Automotive Task Force (IATF): Works on establishing quality standards in the automotive industry, and many Indian auto component manufacturers comply with these standards.

Government Initiatives:

• Make in India: A national initiative encouraging manufacturing within India, which has significantly benefitted the auto component sector.
• National Automotive Testing and R&D Infrastructure Project (NATRiP): An initiative to develop testing and R&D facilities to improve the quality of Indian auto components.
• Atmanirbhar Bharat: A drive for self-reliance that encourages local manufacturing and reduces dependence on imports for automotive components.

Challenges:

1. Global Competition: Indian manufacturers face stiff competition from low-cost markets such as China, which affects pricing strategies.
2. Technological Advancements: The automotive industry is evolving rapidly, and there is a need for Indian manufacturers to adopt new technologies like electric vehicle (EV) components and automation.
3. Quality Standards Compliance: Maintaining compliance with international quality standards and regulations in different markets is a challenge for exporters.
4. Logistics and Infrastructure: The need for better logistical infrastructure to reduce lead times and improve the efficiency of supply chains.

Way Forward:

1. Focus on Innovation and R&D: Investing in research and development to cater to emerging technologies like electric vehicles, autonomous vehicles, and smart manufacturing.
2. Improve Supply Chain and Logistics: Enhancing logistics capabilities to ensure timely and cost-effective delivery of auto components.
3. Diversify Export Markets: Expanding into new and emerging markets in Africa, Latin America, and Southeast Asia, where demand for automotive components is growing.
4. Strengthen Industry Collaboration: Collaborative efforts between the government, industry bodies, and manufacturers will help in addressing challenges and ensuring sustainable growth.

Conclusion:

India’s auto component export sector has great potential for growth. With its competitive advantages, including cost-effective manufacturing, skilled labor, and a strong domestic automotive industry, India is well-positioned to become a global leader in the automotive components market. The continued adoption of advanced technologies, government support, and investment in infrastructure will further enhance India’s role in the global automotive supply chain.