Indian auto industry needs road map for localisation push: Report

“A major potential for import substitution for the industry lies in availability of raw material and technology/capabilities constraints for certain high precision components and economies of scale.”

By   |  Published: 16th Sep 2020  10:00 pm

New Delhi: Exports and a focus on the domestic market offer major potential opportunity areas for the Indian auto industry but the sector needs a roadmap for localisation, according to a report by consultancy firm EY.

As per the report, ‘Atma Nirbhar- The Roadmap to Increase Localisation and Harnessing Export Potential of the Indian Auto Industry’, the industry generated business worth over Rs 30,000 crore annually through import substitution and local manufacturing through initiatives such as ‘Make in India’.

“A major potential for import substitution for the industry lies in availability of raw material and technology/capabilities constraints for certain high precision components and economies of scale,” it said. In the past, the Indian auto industry has worked on initiatives taken by the government such as ‘Make in India’ to improve localisation such as achieving up to 95 per cent localisation in the passenger vehicle category of less than Rs 10 lakh.

EY India partner and Automotive Sector leader Vinay Raghunath said, “With the rapidly evolving mobility ecosystem, stringent emission norms, higher focus on safety and vehicle connectivity and the push towards e-mobility, the import gap is likely to further increase in the short term.” He, however, added that with concerted efforts from all ecosystem players, strong foundations can be laid to offset this in the future.

Stressing the need for a road map for localisation, the EY report said imports of raw material and components by Indian auto component manufacturers amounted to $15.4 billion in 2019-20. “Even local raw material suppliers of steel, copper, engineered plastics, etc, have an import component in the form of their manufacturing input due to constraints such as unavailability, inadequate quality, and dependence on other industries,” it said.