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Auto parts trade more likely to develop 10-15% in FY22: ACMA

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After two consecutive years of decline, India’s ₹3.4 lakh crore automotive parts trade is estimated to develop 10-15% on this monetary yr on the again of a rise in exports, in accordance with the Automotive Element Producers Affiliation (ACMA).

Auto parts firms have additionally resumed their capital expenditure (capex) plans with expectations of progress in new know-how automobiles gross sales and a restoration in home gross sales, ACMA president Sunjay Kapur advised ET.

“We expect progress within the parts trade as a result of we do not cater solely to the home trade however export too. We’re seeing good alternatives, particularly in North America, Europe, even China for that matter,” mentioned Kapur.

Export orders are going up, particularly as a result of firms eager to develop and diversify their sourcing base past China, he mentioned.

The automotive parts trade’s internet turnover declined to ₹3.4 lakh crore in 2020-21 from its peak of just about ₹4 lakh crore in 2018-19. A couple of third of the trade’s internet income comes from exports. The trade is going through challenges on a number of fronts, from a scarcity of semiconductor chips, which is impacting car manufacturing, to a scarcity of containers, which is impacting world commerce. Excessive uncooked materials costs have compelled automakers to extend costs. Coupled with excessive gasoline costs, it has develop into a deterrent to new car consumers.

Nonetheless, part makers are bullish as a result of good macroeconomic indicators and export demand, in accordance with the ACMA president. “There are headwinds. Nonetheless, the nice factor is that demand exists. Passenger automobile demand is there. Industrial automobiles demand is coming again, which is an effective factor,” he mentioned.

The capex cycles of auto part makers are additionally again up, as firms are investing in new applied sciences, particularly electrical automobiles (EVs), mentioned Kapur. “There’s plenty of funding going down in capability growth and in R&D (analysis and growth), which could be very encouraging,” he mentioned.

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