Indian Auto Industry Needs Road Map for Localization Push

Exports and a focus on the domestic market offer huge potential opportunity areas for the Indian auto industry but the sector needs a road map for localisation, according to a report by consultancy firm EY.

As per the report, 'Atma Nirbhar- The Roadmap to boost 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 rely on 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% localisation in the passenger vehicle category of less than Rs 10 lakh.
However, the report cautioned that "recent technological advancement and government legislations such as emission norms, enhanced safety norms and adoption of cleaner fuels could lead to increase in imports due to unavailability of certain raw materials, technology and capability constraints and economies of scale challenges".
Furthermore, auto export as a share of total exports stands at 4.3%, which is way lower than that of Thailand (10 per cent), Germany (13 per cent), South Korea (13 per cent) and Japan (22 per cent). India has huge potential for export which can help the industry to drive up volumes, it said.

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