Page 131 - DECO303_INDIAN_ECONOMY_ENGLISH

Indian Economy

Notes in France. This further deepened the relationship and further orders are likely to place
with Polyplastics. Renault is having alliance with Nissan. The successful development of
the above projects has helped it in getting business from Nissan for their plant in UK and
Spain as well. The Renault/Nissan requirements in terms of Systems are very stringent.
The OEM has worked with the Polyplastics in guiding them improve their systems from
the score “D” to “C” and is further guiding the company to improve its systems to level B.
Recently, it finalised three emblems and one wheel rim cover for their forthcoming project
in Chennai.
The management of Polyplastics is excepting orders for their many more projects in
future also. The management of the Polyplastics credits team spirit in the company to its
current and future growth. Looking into the success of Polyplastics to deliver quality
products and rapid improvement in the system, OEMs are sending many Requests for
Quotation (RFQ) for its products. While the company did not have any major problem in
any of the JVs so far, it feels that the Government should work towards making Indian
arbitration institutions and systems internationally credible. Such an arbitration process
will instil confidence between the two JV partners.
Case Notes
More than 60 per cent of the exports of auto components are to USA and Europe, which
constitute high AQL (Accepted Quality Level) countries. The global focus of the Indian
auto component sector is expected to gain further momentum with a shift in the focus of
Indian component companies from the replacement market to the OE (original equipment)
market. The structure of the customer base in the global markets has also undergone a
major change. In the last decade, the aftermarket share of exports has come down from
65 per cent to 25 per cent in 2007. The share of the component exports to OEMs and tier-I
suppliers is increasing gradually, ensuring long-term relationships and repeat orders on
a regular basis. Geographically, there has been a shift in the markets with the more
developed markets of USA and Europe accounting for a majority of exports. Of the total
auto component exports to OEMs and tier-I Suppliers, America and Europe together accounts
for 57.5 per cent, Asia accounts for 20 per cent and Africa accounts for 10.8 per cent of the
export earnings and other regions such as Oceania, etc. constitute the rest. The share of
Asia in the global pie is gradually on the rise. This signifies that the Indian component
industry has now reached a high degree of maturity in terms of quality and productivity
and has also developed capabilities in the area of design and engineering, which are
critical requirements for being a part of the global supply chain.
The total exports to OEMs and tier-I suppliers in 2006 amounted to INR 8,400 crore and the
rest were supplied to tier-II/tier-III suppliers.
The PTA was signed between India and MERCOSUR in 2004 Implications for the Indian
Auto Components Industry: The auto components industry in MERCOSUR enjoys
significant economies of scale in comparison to India. Both the imports and exports of
components are significant in MERCOSUR vis-à-vis India. The component market in
MERCOSUR is mainly Brazil and Argentina. The auto component industry of Brazil is
three times that of India and that of Argentina is marginally less than India.
Global tier-I suppliers have followed their OEMs into Brazil and have set up significant
capacities. The Brazilian auto component industry is very competitive but is not profitable
at the moment and most local tier-II/tier-III manufacturers are getting out of the business.
Brazil imports stamping components, engines, gearboxes and other sub-assembly (e.g.
steering column). Brazil is a highly protected market and is expected to remain so. The
Argentina auto component industry lacks economies of scale but component manufacturing
is profitable. Imports account for 50 per cent of the turnover of the component industry.
Contd...

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