Car parts exports to grow 40%

According to the Automotive Component Manufacturers Association of India's (ACMA) data, the growth in the domestic market during this financial year will be nearly 28 per cent. It says exports may grow by 40 per cent in the current financial year .

The overall growth in the components segment at 28 per cent in the domestic market surpasses the automobile industry's growth at 18 per cent. The disparity can be attributed to the large after sales (or replacement) market for components in the country.

ACMA Executive Director Vishnu Mathur said, "The industry is capable of achieving an export revenue of $20-25 billion by 2015 and an equal amount in domestic sales."

This in turn will mean a pan-industry investment of Rs 5,500 crore a year for the next 10 years."

Although industry bodies have laid down elaborate plans for the next decade, there is considerable apprehension over the announcements in recent budgets.

"Many foreign component manufacturers are relocating their used machines to India because of cost advantages. The Budget for 2005-06 has reduced the first year depreciation on these machines to 15 per cent, denying the industry the advantage of lower cost. The move will lead to Thailand and China becoming more attractive destinations for investment, which is not good for the Indian automotive components sector," said Mathur.

Lower depreciation apart, the tax of Rs 10 on cash withdrawals is also expected to be a major blow to the component industry which has a large base of small and medium enterprises. "Most of these companies buy raw material in cash from a market that does not follow the cheque system.

An additional charge of Rs 10 to draw money or make travellers cheque or even buy a bank draft does not go down well for this industry," Mathur pointed out.