With increasing focus by the government on introducing advance emission norms and safety standards, the Indian automobile industry is likely to undergo significant technology upgradation over the next 4-5 years, says a research report.
“From directly introducing Bharat Stage (BS-VI) emission standards by April 2020 to implementing advance safety norms in vehicles, the regulatory changes are also likely to present sizeable opportunity for select auto component segments besides altering the demand dynamics (i.e. Petrol-Diesel mix) and pushing vehicle prices upwards,” said a report by ICRA.
According to the agency, new safety standards is likely to increase usage of airbags in Passenger Vehicles (PV) exponentially. Although the proposed safety standards don’t make airbags mandatory, in order to achieve adequate safety ratings for frontal collision, air bags would become a necessary fitment.
“We believe this will also open up a sizeable market opportunity (Rs. 19-23 billion by FY 2020) for airbag suppliers as its penetration in PVs could increase exponentially from ~30-35% (at present),” said the report.
While most of the suppliers of airbags in India are foreign players (Takata, Autoliv, TRW, Toyoda Gosei etc.), citing the strong growth prospects, some Indian component manufacturers have also entered this space.
Although the market opportunity will be sizeable, the value addition for domestic suppliers would be low in the near-term due to limited scope for backward integration and lack of technological capabilities,” said the report. “
“The import content in airbags currently stands at 60-80% as the key components i.e. inflator and sensors are imported. Developing these locally would require scale and technical capabilities.”
Source : BS Motoring
