NEW DELHI (TIP): The Indian auto components industry may invest around Rs 70 billion over the next three years on new projects, according to a study by ICRA. Automobile manufacturers such as Hero MotoCorp, Maruti Suzuki and Ford, plans to establish greenfield facilities in Gujarat, encouraging auto component makers to invest around these facilities. “The above greenfield investments may entail total investments of Rs 7,000 crore to be incurred by auto component manufacturers over the next three years,” highlighted ICRA.
“Over the near term, the trepidation of auto part makers arising from dull automobile demand is likely to remain…the profitability of auto component manufacturers may be hit harder due to their smaller scale of operations and limited operational and financial flexibility,” as per the study. However, over the medium term factors such as growing thrust on localisation and expanding business in new geographies should allow the industry to grow at a relatively faster pace than the auto OEM segment, the study added.