New Delhi, Mar 1 (KNN) In a strategic move aimed at bolstering self-reliance and reducing dependency on imports, the Indian auto industry is gearing up to inject up to USD 7 billion, approximately Rs 58,000 crore, into deepening the localisation of advanced components by FY28.

This substantial investment, slated to occur between FY24 and FY28, underscores a concerted effort by automakers and their suppliers to capitalise on the evolving landscape of global trade and manufacturing strategies, reported ET.

According to insights provided by the Automotive Component Manufacturers Association (ACMA), these investments will target a wide array of components, ranging from electric motors to automatic transmissions.

The overarching goal is to significantly curtail imports and leverage the emerging trend of multinational corporations diversifying their sourcing strategies, often referred to as the 'China Plus One' approach.

Already, the industry has embarked on over 500 localisation projects across 11 key component categories, including drive transmissions, steering systems, engines, electricals, and body chassis.

This initiative, backed by an investment exceeding Rs 3,000 crore, has yielded promising outcomes, with net imports witnessing a notable reduction of 5.8 per cent in just two years up to FY22, doubling the initial target.

Looking ahead, the industry remains committed to amplifying its localisation endeavours further, aiming to achieve an additional 16-20 per cent reduction in imports by FY27, amounting to nearly Rs 25,000 crore.

Key focus areas for this mid-term strategy include automatic transmissions, power control units, high-strength steel, and combined charging systems, all of which constitute a significant portion of the country's auto parts imports.

Notably, these localisation initiatives are not solely aimed at curbing imports but also position India as an export hub for advanced auto components.

Shradha Suri Marwah, President of ACMA, emphasised the importance of building resilient supply chains and enhancing value-addition within the Indian auto components industry.

Marwah highlighted the industry's increasing contribution to value-addition, anticipating an additional investment of USD 6.5-7 billion in the next five years, particularly focusing on design, development, and emerging technologies such as electronics and EV components.

The efforts towards localisation have already begun to yield positive results, with the pace of import reduction nearly doubling expectations, reaching approximately 6 per cent in the past two years.

Despite China's dominance in auto parts supplies to India, its market share has witnessed a decline, paving the way for increased localisation efforts.

Moreover, these localisation initiatives align with the government's production-linked incentive (PLI) scheme, which aims to address cost disabilities and stimulate domestic manufacturing.

Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), highlighted the symbiotic relationship between industry initiatives and government support, noting a significant decline in the share of imports relative to industry turnover between FY20 and FY22.

(KNN Bureau)