Auto parts industry expects growth of up to 23 per cent in the current financial year

4. November 2021

The auto parts and supplier industry in India will grow between 20 and 23 per cent in the current fiscal year, reports rating agency ICRA. The recovery in the domestic auto market and robust exports are mainly responsible for the growth, it said. All sectors, including passenger and commercial vehicles, will post double-digit growth in the current fiscal year, ICRA added. However, the industry continues to be concerned about rising raw material prices and the shortage of semiconductors. Most of the domestic auto industry, especially passenger vehicles and tractors, are witnessing strong demand with values almost at pre-Covid 19 pandemic levels. Even the medium and heavy commercial vehicle segment, which was adversely affected in Q2, is now showing signs of recovery, the ICRA report said. This also points to more heavily used production capacities in India in the future. Many automotive parts and components require AIS certification for import into India and use in the Indian market, and often also BIS certification.

ICRA surveyed 50 automotive suppliers to prepare the report and market analysis. On average, the companies reported a 140 per cent increase in sales compared to the previous year. However, these figures are based on a weak first quarter of the 2021 financial year, the report adds. Despite constraints due to the second covid wave in India, the observed market declined by only 19 per cent in the first quarter of fiscal 2022 relative to the previous quarter, instead of the projected 30 to 35 per cent. The report also found that sales of aftermarket parts such as tyres and batteries declined by only 13 per cent compared to the overall market’s aforementioned 19 per cent.
Regarding the price increase of raw materials, the ICRA report pointed to the long supply chain at OEMs. Normally, price increases would show up in 1-2 quarters, but many companies had already adjusted their prices and even widened the profit margin somewhat. The shortage of semiconductors remains problematic for the industry. Overall, automakers account for about 11 per cent of global semiconductor production. According to the report, major OEM manufacturers have only small quantities of semiconductors in stock and would therefore not be able to respond fully to a short-term increase in demand from carmakers. The disruption at some semiconductor production facilities is exacerbating an already tight market situation, ICRA said. OEM manufacturers are therefore trying to switch to alternative suppliers or to obtain the goods by air freight. The ICRA report adds at the end that certain automotive suppliers were able to increase their profits on a quarterly basis. This was supported by significant export volumes and increased demand from key customers in the industry.
Cars and two-wheelers and their components have to be certified under the AIS guidelines in India. AIS stands for Automotive Industry Standards, the technical automotive standards for India. MPR International GmbH – India Certification will be happy to support you with AIS certification and is also available to answer any questions you may have.
AIS stands for Automotive Industry Standards, the technical automotive standards for India, while TAC stands for Type Approval Certificate. This kind of automotive product certifiation is conducted by authorities like the International Center for Automotive Technology (iCAT).
Depending on the product category, there are different certification steps. We will be happy to advise you on certification in India like AIS, BIS, WPC, TEC or PESO and are always available to answer your questions.
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