Auto industry to invest $7 bn in 5 years to deepen parts localisation
Indian auto industry is set to invest up to $7 billion, or about Rs 58,000 crore, by FY28 to deepen localisation of advanced components from electric motors to automatic transmissions to reduce imports and capitalise on multinationals’ ‘China Plus One’ sourcing strategy.
Automakers and their suppliers are likely to make this investment between FY24 and FY28, industry body Automotive Component Manufacturers Association (ACMA) said.
These firms have already undertaken more than 500 localisation projects across 11 key component categories including drive transmissions and steering, engines, electricals and body chassis at an investment of over Rs 3,000 crore to reduce net imports by 5.8% (double the target of about 3%), or by Rs 7,018 crore, in the two years to FY22, as per the latest assessment on localisation programmes jointly conducted by ACMA and Society of Indian Automobile Manufacturers (SIAM).
Work is on to increase net localisation by another 16-20%, or about Rs 24,995 crore, over the following five years ending FY27, they said.
Projects are underway to reduce imports of airbags to 20% by 2028 from 26% in 2023 and 100% in 2012, those of electronic stability control units to 47% by 2025 from 63% in 2023 and 100% in 2015, and imports of ventilator fan systems to 10% by 2026 from 85% in 2024 and 100% in 2021.
Plans to deepen localisation of automatic transmissions, power control units, high strength steel, and combined charging systems are also on cards mid-term.
These components account for more than 75%
