At under 60,000 units of CE, the industry?s contribution to the auto component industry, at nearly $40 billion for 2010-11, is still very insignificant considering a tractor production of over 5,25,000 units and medium and heavy commercial vehicles over 3,30,000 units. With an accelerating Indian automobile industry, the inter-related Indian auto component industry is heading strong towards a high growth trajectory. The $30 billion industry is anticipated to grow on the back of robust domestic demand.

The Indian auto component industry recorded its highest year-on-year (y-o-y) growth of 34.2 per cent in 2010-11, raking in revenues of $39.9 billion, the major contribution coming from exports at $5 billion and fresh investments from the US at around $2 billion.

It is crystal clear that to reach world-class levels, infrastructure needs a tremendous boost for the next several years as this augurs well for the CE sector where most of the major players continue to upgrade capacity and widen product lines. Overall there is buoyancy but there could be some rollercoaster rides in the next one-and-a-half years due to many factors such as the volatility in oil and commodity prices and inflationary pressures.

The industry feels it imperative that the component and aggregate industry, especially the small and medium industries of the economy, grow manifold to offset the import dependency. As the exchange rate issue means greater input cost to the industry, most of the OEMs have furthered the localisation programme. On a positive note, the fluctuating cost, whether of input materials or of power, fuel, or the technology cost on the other hand, finally boils down to one?s competency to innovate, one?s ability to provide value at lower cost. This is the major X factor in the CE sector as per data collected by EQUIPMENT INDIA. And increasing competition has fuelled innovation to greater extent.

It is also a positive sign that the government has clearly stated in the manufacturing policy, that the share of manufacturing in GDP has to move from 14 per cent to 25 per cent as the service industry, which contributes to 50 per cent of GDP, will not take us to sustainable levels vis-?-vis the growth target.

All eyes are pinned on the Budget and the return of the ruling government?s resolve to restore the reform process.

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