Big Move to Be Experienced by the Automobile Sector-explained

India is self-assured to soar, higher than a lot of fast-growing economies over the course of the next decade. At the same time, original equipment manufacturers (OEM) and component manufacturers of the automobile sector aspire to accomplish worldwide eminence. 

The future of the auto OEM and auto component industry is getting shaped by numerous different trends, policies, and discontinuities. 

A key restructuring is ongoing in global supply chains after widespread disruption in recent times because of COVID and the conflict between Ukraine and Russia. In an attempt to diversify the supply chain, a lot of global companies are shifting from traditional manufacturing bases to nations with similar strengths in manufacturing. 

This has proven to be beneficial for countries such as Vietnam (in electronics) and Mexico (in furnishings and appliances). 

It is believed that in Industrial and automobile products, India will have a huge benefit because of its available supplier ecosystem, scale, competitive cost structure, and, most recently, policy initiatives of the government. This shift is most likely to be accelerated by the latest cost pressures (energy and labour) on European and US industrial organizations and continued lockdowns in China (till recently).

Rise in the Engineering Exports to US and Germany

Regarding Industrials, the export of India to certain countries has grown at a healthy pace. On the basis of the Compound Annual Growth Rate of 5 years, exports sent to USA, Thailand, and Singapore rose by 23%, 34% and 17%, respectively, in the industrial machinery and equipment segment, while in the exports regarding electrical machinery segment to USA, UAE, and Germany rose by 24%, 28%, and 18% respectively.

The automobile sector is also well-placed to benefit from structural shifts. In the automobile sector, numerous global organizations are looking at India’s export-oriented production. 

FDI inflow in the automobile sector in the Financial Year 2022 jumped sharply to USD7 billion to form 12% of the overall FDI inflows in India. 

The automobile exports of India have grown traditionally by 6-8% pre-pandemic and strong growth of double digits in the previous year. Automobile exports to both Europe and North America increased.

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