India is steadily emerging as the land of opportunity for carmakers and hence there's no doubt that many of them have made India their production base. We've seen it happen with carmakers like Jeep, Citroen, Mercedes-Benz, Volkswagen, Skoda among others. This has seen the country develop into a highly significant regional auto manufacturing and export hub that contributes US $ 27 Billion in export revenue.
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The contribution to the GDP too is at 6 per cent but more needs to be done. Speaking at the 61st Annual session of the Automotive Component Manufacturers Association of India (ACMA) on the theme "Living with Volatility - Survival, Revival & Growth", S. S. Kim MD and CEO, Hyundai Motor India, threw light on the fact that there needs to be significant focus on setting up infrastructure in Tier 3,4 towns, to ensure that there's a higher level of competence and stability provided to the industry.
SS Kim said that government intervention and support will go a long way in making India a true manufacturing hub
He said, "For true localisation in India, we need to strongly focus our efforts on setting up Infrastructure to enhance sub tier downstream value chain. This strategy will ensure a greater level of competence and stability for the entire industry in India and for our export operations. To create a robust sub-vendor ecosystem – government intervention and support will go a long way in making India a true manufacturing hub."
The last two years have been extremely challenging for the industry with two lockdowns in the wake of the pandemic. The year 2020-21 witnessed the second successive year of contraction in vehicle sales in India and overall vehicle sales fell by over 13.6 per cent. The component industry also witnessed a de-growth of 3 per cent. But there has been a sense of revival in the past couple of months, with the industry witnessing a spike in sales due to the pent up demand.
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However, boosting localisation will certainly help to de-risk supply chains and reduce import dependency. The government initiatives of the Production Linked Incentive scheme and the Scrappage policy will help to a certain extent but developing infrastructure in Tier 3 cities will certainly play a major role in advancing value chain supply.
