Indra’s Drishtikona (Viewpoint)

Evolution of Auto Components Industry in India

Posted : September 28, 2004 at 7:18 am [IST]

In 1961 when I joined Hindustan Motors after IIT, HM was one of the three car manufacturers of the country at that time. HM must get the credit to build and develop the initial stages of the components industry. Some one may blame that it encouraged only its own men, but then there was no one else at that time ready to put money in engineering enterprises with so low a volume requirement. In 1961, HM was finish machining pistons from imported castings. With all almost no vendors for even simple components, the in-house manufacturing included bolts, studs, washers, and nuts beside the other simpler items as push rods, valves, valve rockers, shafts. Even seats and radiators were manufactured in-house. While HM engineers helped develop oil pump for the engine through a vendor, water pump assembly remained in-house manufacture items. From end 60s volume started picking up. Some entrepreneurs came up in auto components. And mostly it was South that gave the lead. India Pistons, Brakes India. Lucas TVS, Sundaram fasteners were all located in Madras. HM started buying out pistons and then valves. But naturally with manufacturing facilities available in-house, it was a difficult task to convince finance people to get the parts from vendors. But it was only with Maruti Motors tie up with Suzuki that gave real impetus to growth of auto component industry. There was volume and support with ensured business. The contribution of MUL has been great and credit goes to the Japanese who provided the necessary technology and support to component industry. It gave births to a large number of newer generation entrepreneurs- many of them technocrats in auto component sector. With liberalization of nineties, many automobile manufacturers set up their plants in India. Most of them were only assembly plants. But by that time, the auto component industry was in good shape to meet the government’s initial phase manufacturing obligations.

Today, the major volume manufacturers are Maruti, Hyundai and Tata Motors. The production volumes of these companies have made the auto components sectors flourish. But others, who are not producing as big a volume as these three, are equally credited to the present good state of business of auto components companies. And the best part of the confidence in Indian auto components is from the offices of many MNCs that have been setup to procure components for OEMs in the developed countries. Auto components are exported to now OEMs and not only for after sales market. However, one big volume car manufacturing can make a major difference. Suzuki newly announced plant for car building at Manesar will boost the auto component business to a great extent.

Suzuki Motor Corporation’s expansion plans could turn out to be a big push for the automobile components industry. The 250,000 cars per annum assembly unit announced by Suzuki could result in an investment of up to Rs 7,500 crore by the components industry. The automobile components industry expects the investment in the new Suzuki plant at Manesar will be around Rs 2,500 crore. As every rupee spent in a car project needs to be backed by a downstream investment of Rs 3 in components, vendors say the industry could see an investment of Rs 7,500 crore.

And according to an ICRA study, every car produced leads to 5.31 jobs in the economy. The proposal to make 250,000 cars could result in 1.32 million jobs. This is what the country needs today to meet the employment requirements of the country. The days of cars branded as luxury have gone. A car is the need for the youngsters to flourish in their professional life.

- Indra

Category: Manufacturing |