Covid 19 effect: Auto component industry's revenue decline 3% in FY21

The fall for the second straight year comes on back of lower automobile volumes

India’s auto component industry saw the cumulative revenue decline 3 per cent to Rs340 lakh crore in the year that ended in March 2021, industry body ACMA (Auto Component Manufacturers Association) said at a press briefing on Tuesday.

The nationwide lock-down in wake of the pandemic put the entire supply chain in disarray, said Deepak Jain, president, ACMA. “The entire industry took a significant time to stabilise again post the gradual unlocking of the economy,” said Jain.

While vehicle sales and production improved quarter-on-quarter from second quarter of FY20-21 onwards, however the first quarter of FY 21-22 was once again confronted with another round of disruptions due to the second wave of the pandemic, he said.

Amid a contraction in the overall auto market due to the pandemic, this is for the second straight year that the turnover of industry has slipped. Besides that, a global shortage of semiconductors also weighed on production.

Other segments including aftermarket, imports and exports also saw a drop. Exports of auto components in the same period dropped 8 per cent to Rs.0.98 lakh crore (USD 13.3 billion) in 2020-21 from Rs 1.02 lakh crore (USD 14.5 billion) in 2019-20.

A slowdown in the domestic market also impacted imports of components into India. It fell by 11 per cent to Rs1.02 lakh crore in FY21 from Rs1.09 lakh crore in FY20. Asia accounted for 66 per cent of imports followed by Europe and North America at 13 per cent and 17 per cent respectively.

Imports from Asia declined by 9 per cent, while those from Europe by 13 per cent and from North America by 17 per cent, it added. The industry body is hoping that the Government’s PLI and other policies focused on export compositeness and increasing localisation will further reduce trade gap.

Rating agency Icra expects India’s auto component industry to witness revenue growth of 20-23 per cent in FY22 on a low base of last fiscal and a likely decent recovery in production in the second half of the year, it said in a release last month. Semiconductor shortage and high commodity prices though could impact component manufacturers' performance.