term. Demand in the replacement market will grow due to increase in the utilization rate of CVs and increase in
penetration of cab aggregator services in the overall stock of passenger vehicles.

Imports

Imports are expected to grow at 1-3% CAGR in the long term. Greater focus of the Indian government on
indigenization is expected to reduce imports of components in the long run. With the government’s focus on
electric vehicles (EVs) and with no material supplier of battery management systems (BMS) in India, imports
from this segment are expected to drive growth, although limited by low EV penetration, in the medium term.
Growth in imports will, however, be restricted by the growing research and development (R&D) efforts of local
players, as well as anti-dumping and customs duties levied by the government.

Exports

Trend in auto component exports

 

 

900 8 billion 25%
800 20%
700 15% 15%
600 10%
500
400 Ses
300 02
200 5%,
100 -10%
-(14)9
0 12)-(14)% -15%
FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY24P.
mms Exports ‘Growth (RHS)

 

Source: CRISIL Research

Exports have a high correlation with the global economic scenario. The major exports are to North America and
the EU. They account for almost half of the overall exports pie. Exports declined by 56% on-year in the first
quarter of fiscal 2021. Since there is a fear of further downside on account of the second wave of the pandemic in
the major importing nations, CRISIL Research expect exports to de-grow by 12-14% in fiscal 2021.

Penetration of Indian automotive components in major markets is minuscule -- India's exports stand at less than
1% of global exports. In the last five years, exports logged a CAGR of only ~7%, mainly because India’s exports
comprise low-value products such as chassis. However, this scenario is changing as India’s technological
capabilities are improving because of collaboration with foreign partners. In long term, CRISIL Research expect
the exports to grow at the CAGR of 3-5% between fiscals 2020-2024 to ~2 762 billion in fiscal 2024.

Asia has been gaining traction in India’s auto components market

1% 1% 6% 5% 6% 6%
5% 5% 5% 5% 1% 4%
FY16 FY19 FY20

FY15 FYI7 FY18
Africa S.America Middle East «== Asia. «= = N.America Europe

Note: UK, Germany, France and Italy constitute Europe.
Source: CRISIL Research

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