Auto Component Industry in India: Enhancing the Capabilities of the

Industry

Presentation by:

Mr. Amit MukherjeeDy. Executive Director

17th October, 2013

About ACMA

• Established in 1959

• Apex body of Auto Component Industry in India

• Over 700+ members from the Organized sector

• Represents 85% of the Industry by turnover

• Represented on all Government and Industry bodies –

Strategic to the Auto Sector

• Offices across all Regions in the Country

• An ISO 9001-2008 Institution

ACMA – Excellence in Service Delivery

• India: A Vibrant Economy

• Automotive Industry in India

• Auto Component Industry in India

• Cluster Initiatives

• Policy Environment

3

Agenda

1. Largest Democracy – 1.2 billion people, Growing Middle Class

2. 4th largest GDP (PPP) and 10th largest GDP (Nominal, USD 1.8 trillion)

3. One of the fastest growing economies - Estimates for 2013-14: ~ 5%

• India’s average GDP growth rate: 8.4% over past 5 years

• Expected to outpace China in the next decade

4. 3rd Largest Investor base in the World

5. Robust Legal and Banking Infrastructure

6. Demographics Advantage – Youth driven economy

7. Suburbanization & Rural to Urban Migration – 140 million by 2020; 700 million by 2050

8. 2nd largest pool of Certified Professionals and highest number of Qualified Engineers in the world

9. Investment in Infrastructure

4

India: A Vibrant Economy

Automotive Clusters in India

West

Hindustan MotorsTata Motors

North

Significant Manufacturing base of OEMs – Indian & Global

Ashok Leyland BMWCaterpillarDaimlerFordHindustan MotorsHyundaiNissan

RenaultRoyal EnfieldSame DeutzTAFETata MotorsToyota KirloskarTVS Volvo Buses

East

South

EicherEscortsHero Moto CorpHonda MotorcycleHonda SIELCars ICMLJCB

Maruti SuzukiNew HollandMahindraSuzuki MotorcyclesSwaraj MazdaTata MotorsYamaha

Bajaj AutoFiatForce MotorsGMJohn DeereMahindraMan Force

Mercedes BenzPSASkodaTata HitachiTata MotorsVolkswagenVolvo Eicher

(Illustrative List)

*New Hub: Sanand Tata Motors, Maruti, Ford India,

5

1,838 2,357

2,987 3,146 3234

5100

10,000

-

2,500

5,000

7,500

10,000

2008-09 2009-10 2010-11 2011-12 2012-13 2015-16 2020-21

(’000 units)

CAGR 2008-12: 14%

CAGR 2012-21: 13%**

Passenger Vehicles Production

*

(* Estimates)Figures for financial year – April to March

Source: SIAM

6

417 568753

929 832

1420

2350

0

2500

2008-09 2009-10 2010-11 2011-12 2012-13 2015-16 2020-21

891711132

1417616330 16561

20974

30231

0

35000

2008-09 2009-10 2010-11 2011-12 2012-13 2015-16 2020-21

Figures for financial year – April to March

( ’000 units)Commercial Vehicles

(* Estimates)

7

Tractors( ’000 units)

CAGR 2011-21: 5%*

Two & Three Wheelers

(In ’000 units)

Commercial Vehicles include:• Small Commercial Vehicles (SCV) < 1 ton• Light Commercial Vehicles (LCV) > 1 ton but < 7.5 tons

• Medium Commercial Vehicles (MCV) > 7.5 tons but <16 tons• Heavy Commercial Vehicles (HCV) > 16 tons

40 48 54

100

180

0

200

2009-10 2010-11 2011-12 2015-16 2020-21

Construction Vehicles( ’000 units)

CAGR 2011-21: 14%*

CAGR 2008-12: 22% CAGR 2012-21: 11%*

CAGR 2008-12: 16% CAGR 2012-21: 7%*

420545

640 641710

1,000

0

200

400

600

800

1000

1200

2009-10 2010-11 2011-12 2012-13 2015-16 2020-21

Other Vehicles Production

Source: SIAM7

8

Auto Component Industry Profile - Turnover

Comprehensive Product Range

US

D b

illio

n

27.2 24.1 30.841.3 42.2 39.7

66

115

0

30

60

90

120

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2015-16 2020-21

(* Estimates)

* CAGR – 15%

Figures for financial year – April to March

*

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2015-16 2020-210

5

10

15

20

25

30

35

40

4.5 5.1 4.26.6

8.8 9.712

30

7.1 8.2 810.9

13.8 13.7

19

35

Export Imports

*

*

**

Auto Component Industry Profile – Exports & ImportsU

SD

bill

ion

Export Destinations

OEM/Tier 1 account for 80%; Aftermarket for 20%

(* Estimates)Figures for financial year – April to March

Export CAGR – 17% Import CAGR – 14%

Sources of Imports

Asia; 24.3%

Europe, 35.6%

North America;

24.0%

Latin America and the Carib-bean, 6.6%

Oceania; 0.9% Africa, 8.6%

Asia; 58.65%

Europe ; 32.48%

North America; 7.16%

Latin America and the Car-ibbean; 1.17%

Oceania; 0.18% Africa; 0.36%

Indian Suppliers’ Focus – Global Best Practices

Industry fast embracing modernshop-floor practices: 5-S; 7-W Kaizen TQM TPM 6 Sigma Lean Manufacturing

Deming Award - 12

Japan Quality Medal - 2 JIPM - 3Shingo Silver

Medallion - 1TPM Award

- 15

Largest no. of Deming Award winning companies outside Japan

Focus on Quality

Enhancing Competitiveness : Process Capabilities

ACT is a division of ACMA, called “ACMA Centre for Technology”. ACT focuses on

providing technical services to ACMA members as well as improving capabilities of

the Industry by organizing cluster programs on pan-India basis

- ACT SME Cluster  - ACT UNIDO Partnership Program - ACT SME Advance Cluster

- ACT Foundation Cluster  - ACT Advance Cluster  - ACT Engineering Excellence Cluster

ACT Clusters for company level engagement

Roadmap for ACT Foundation Cluster

Industry focus - Integrated Development & Manufacturing

Leadership position in the Automotive World

Manufacturing

Vehicles and components manufactured in India are increasingly meeting global standards of Quality, Reliability and Durability

Product & Process Development

However, today there is limited end-to-end product development and process engineering capability across the supply chain

Innovation

Significant work needs to be done in this area to improve India’s innovation quotient

Cost and quality (strong foundation)

Enhancing Competitiveness: Product and Process Capabilities

14

• Engaging with Global T2/ T3 suppliers for joint development , collaboration and partnership National Manufacturing Competitiveness Program

• Partnering with Global institute like Fraunhofer, MIT and others for join development and product innovation as well as working with local institutes

• Companies are setting up their Global footprint by leveraging Merger and Acquisition.

Favorable Policy Regime

Auto Policy 2002 and Auto Mission Plan 2006-16 – framework for Automotive Manufacturing in India

• Manufacturing and Imports Free from Licensing and Approvals

• WTO compliant policies (no import restrictions and reduced tariff levels)

• Robust Legal system and stable Foreign Exchange regime

• Joined UN-ECE WP 29 for Global Standard in Technology

• Increased budgets for R&D activities

• 100% FDI permitted without prior Govt. approval

Robust Indian Automotive

Industry

Government support / assistance for Small Enterprises

16

• National Manufacturing Competitiveness Program

• Design Clinic Scheme for design expertise for Manufacuring

• Competitiveness Improvement -Lean Manufacturing / Cluster Development Program

• Setting up Common facililites like Tool Room , Training centers at diferent auto component clusters

• Purchase Preference Policy

• Participation in overseas events/ Trade shows

• Skill Development

India’s automotive R&D testing infrastructure: National Level NATRIP Centres

Vehicle Research & Development Establishment (VRDE), Ahmednagar

• Research, design, development & testing of vehicles

• Centre of excellence (CoE) for photometry, electromagnetic compatibility & test tracks

Indore: National Automotive Test Tracks (NATRAX)

• Complete testing facilities for all vehicle categories

• CoE for vehicle dynamics & development

Automotive Research Association of India (ARAI), Pune

• Service for all vehicle categories• CoE for power-train development & material

Chennai Centre, Tamil Nadu

• Complete homologation service for all vehicle categories

• CoE for infotronics, EMC & passive safety

Rae Bareilly Centre • Services to agri-tractors, off-road vehicles & a driver training centre

• CoE for accident data analysis

International Centre for Automotive Technology (iCAT), Manesar

• Services to all vehicle categories• CoE for component development, noise

vibration & harshness (NVH) testing

Silchar Centre, Assam

• Research, design, development & testing of vehicles

• CoE for photometry, electromagnetic compatibility (EMC) & test tracks

Collection &Dissemination of

Information

QualityEnhancement

TechnologyUp-gradation

Promotes IndianAutomotive Component Industry

Vital Catalyst for Industrial Development

Trade Promotion

ACMA as an Association and its initiatives

PRAGATI MAIDAN NEW DELHI

6th – 9th February 2014

INDIA EXPO MARTGREATER NOIDA, UP

7th – 11th February 2014

Auto Expo 2014

We look forward to Welcoming you!

ACMAThe Capital Court, 6th Floor, Olof Palme Marg, Munirka, New Delhi – 110 067

Tel: 011-26160315, Fax: 011-26160317E-mail: acma@acma.in, Website: www.acma.in

Thank You

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