December 23, 2021
Large-scale digitization, the rapid growth of the economy, and learnings from the past two years of the pandemic is expected to come in handy
Several manufacturers are open to incorporating new technologies, especially in the EV space
Setting up scrappage centres and inspection and certification facilities would result in the withdrawal of old vehicles
India's automotive components industry is expected to grow by 10-15% in 2021
The Indian automotive industry is entering the new year with a positive outlook as it looks to reach pre-pandemic levels of sales. The industry looks to build on a solid foundation laid in 2021 amid the semiconductor shortage and uncertainty due to the Omicron variant. Large-scale digitization, the rapid growth of the economy, and learnings from the past two years of the pandemic are expected to come in handy as demand continues to remain resilient – notably in the passenger vehicle segment. In addition, several automobile manufacturers are open to incorporating new technologies, especially in the electric mobility category, which is expected to result in numerous launches in both four- and two-wheeler categories in 2022.
Favourable government policies such as the recently announced Rs. 76,000 crores for semiconductor manufacturing scheme, the extension of FAME-II scheme till 2024, improved incentives for the two-wheelers segment, production-linked incentive (PLI) scheme for the auto and auto component sector for Rs. 26,000 crores, and PLI for advanced chemistry cell for Rs. 18,000 crores will provide enormous support to the sector as it implements innovative technologies.
Although there has been an increased demand for used cars as customers looked for more affordable means of personal transport during the pandemic, the setting up scrappage centres and inspection and certification facilities would cause the withdrawal of vehicles that are not roadworthy, thereby adding to the market demand.
It has also been observed that global demand for India-made auto components and the focus on electric vehicles has resulted in several opportunities that the component manufacturers can harness According to Sunjay Kapur, president of the industry body Automotive Component Manufacturers Association (ACMA), India’s Rs. 3.4 lakh crore automotive components market is expected to grow by 10-15% in 2021 and by 2022, all segments of the vehicle industry – especially the two-wheeler sector – will continue this upward growth trajectory.