Vinnie Mehta on Tuesday said wars in Europe and West Asia have led to more freight cost and impacted the industry’s exports to Europe
The Indian auto component industry is facing headwinds due to the Russia-Ukraine war in Europe and the Israel-Hamas war in West Asia, said Vinnie Mehta, director general (DG) of Automotive Component Manufacturers Association (Acma), on Tuesday. He said the two wars have led to more freight cost and impacted the industry’s exports to Europe.
“In terms of the headwinds, there are geopolitical challenges. There are wars happening and as a result of which some of our exports have been impacted (in) Europe,” he said while speaking a conference on the industry’s FY25 performance review.
According to the performance review presentation by Acma, the Indian auto component industry registered an export of $6.75 billion to the European region in FY25, a decline of 2.1% year-on-year. However, imports saw a 6.8% increase from the region to $5.77 billion.
“It (the wars) has led to more lead time for our exports,” Mehta said.
On the contrary, in all other major markets, including North America and Asia, India’s auto component exports reported a growth. Export to North America grew 8.4% to $7.35 billion in the last financial year while import from the region grew 1.3% to $1.65 billion. While exports to Asian countries grew 15.1% to $5.92 billion, imports from the region rose by 8.6% to $14.91 billion.
Referring to the rare earth crisis, the Acma DG said there was no clarity about when the issue will be resolved and when supplies would resume.
“We're facing challenges on front of rare earth magnets from China. There is no visibility as to when will we be able to resolve this issue,” he said while adding that the rare earth crisis was a wake-up call for the industry to get atmanirbhar (self reliant).
“If we do not do it (get self reliant), we're gonna die,” he said.
“I think there's no option left. The government's very clear (that) we have to move towards higher localization. The industry is aligned (to it). We are getting stuck in certain specific areas and certain specific components, but I think the roadmaps are being made,” Mehta said.
“We don't want to be stuck in situations like this as a country and as a as an industry,” he added.
However, he did not anticipate any major impact on the auto component industry due to the rare earth crisis as it was mostly limited to electric vehicles.
The component industry’s sales to EV OEMs accounted for 6% of the total sales of Rs 5.70 trillion to OEMs.
Overall, the auto component industry reported a turnover of Rs 6.73 trillion ($80.2 billion) in FY25, growing by 9.6%, Acma said. The industry had a compound annual growth rate of 14% from FY20 to FY25, almost doubling the size over the five years.