Indian Auto Components Industry Faces Logistical Challenges Amid Growing Exports

New Delhi, July 26 (KNN) The Automotive Components Manufacturers Association of India (ACMA) has reported a mixed outlook for the sector, highlighting strong export growth despite significant logistical challenges, particularly due to the ongoing crisis in the Red Sea.

ACMA President Shradha Suri Marwah stressed that while export demand remains strong, logistics has become a priority issue.

The crisis in the Red Sea, which has hit a key shipping lane that carries almost 30 percent of global container traffic, has forced many shipping companies to change routes, leading to bottlenecks at alternative ports.

“The repercussions of this crisis are directly affecting Indian automakers,” Marwah said. “We are seeing longer time-to-market, longer production cycles and rising inventories, which are putting pressure on working capital.”

The crisis has extended shipping times by 7 to 14 days, with many companies choosing the alternative of shipping through the port of Singapore.

Despite these challenges, the auto components sector showed resilience, with exports growing 5.5 percent year-on-year to $21.2 billion in fiscal 2024.

ACMA CEO Vinnie Mehta noted that export growth outpaced import growth, indicating a positive trend toward localization. North America, Europe and Asia remain the top export destinations, together accounting for 89 percent of total exports.

The secondary market segment also recorded significant growth, with turnover in the 2024 financial year amounting to USD 11.3 billion, compared to USD 10.6 billion in the previous year.

This growth is attributed to increased demand in the used vehicle market and greater adoption of e-commerce in organised sectors.

It is worth noting that sales of electric vehicle parts now account for 6 percent of the automotive components industry’s turnover, which is twice the turnover of the previous fiscal year.

ACMA also announced the creation of the ACMA Mobility Foundation, an initiative to support innovation and collaboration with start-ups in the area of ​​advanced technology interfaces.

While the industry outlook remains largely positive, with stable domestic demand and new entrants into the mobility market, challenges remain. These include ongoing geopolitical issues, rising transportation costs and high GST rates on auto parts.

(KNN Office)