In a first, auto parts industry becomes export surplus: ACMA.

Chennai: Contraction of auto industry due to Covid induced lockdown, orders from global corporations for supply for parts helped the auto component industry to turn export positive — for the first time ever. Data from Automotive Components Manufacturers Association (ACMA), the auto component industry’s exports for H1FY21 were $5.2 billion (Rs 39,003 crore) whereas its imports were at $5 billion (Rs 37,710 crore) turning the sector net forex positive. Auto component imports were down nearly 33% from $8.2 billion and exports contracted 23.6% from $7.4 billion in FY20.

However, the industry contracted 34% in the April-September period at just under $16 billion (Rs 1.19 lakh crore). 

“Many countries stayed open while India went into lockdown which helped export to contract less. Also this H1 domestic industry has contracted -- auto component supplies to vehicle makers is down from $22billion last H1 to $11.6 billion this year -- so imports contracted accordingly. In a couple of years auto components will be sustainably export surplus as a sector,” said ACMA president Deepak Jain. 

US continues to be India's top export partner with 28% share followed by Germany (8%), Thailand and Turkey (4% each). While Europe, which accounts for 31% of exports was down 28%, North America and Asia, accounting for 30% and 29% respectively were down 28% and 30% respectively. In terms of imports China is still the top with 27% though imports were down 36%. Germany with 13% share was down 40%, South Korea with 12% was down 46% and US with 9% was down 27%. 

In domestic terms with some segments recovering component companies are back to looking at capex and expansion of capacity. “After peak investment of $57 billion in FY18-19, only incremental investments were needed but some companies are already looking at fresh investments with some segments hitting 85% capacity utilisation though others are still at 50%,” said Jain. The ACMA PwC survey showed ‘companies have mostly recovered and are back to moderate financial health’ and the more healthy ones are “actively focusing on capex and merger and acquisition opportunities,” added Jain.