Auto And Auto Components Sector Profile, 2016

Auto and Auto components Sector ProfileIndia ScenarioAuto Industry Facts: India Automobile manufacturing Auto component manufacturing Largest $ 77 bn. $ 43.5 bn. Three wheeler manufacturer in Size of the Indian the world with annual production Size of the Indian Automotive sector capacity of 7.8 million units Auto component sector 2nd largest Contributes 7.1% Two wheeler manufacturer in the Contributes 2.3% to to India’s GDP in world with annual production India’s GDP volume terms capacity of 20 million units 6th largest Contributes 8% to Passenger vehicle manufacturer in Contributes 4% to India’s total exports the world with annual production India’s total exports – –$ 19.60 bn . capacity of 37 million units $ 10.90 bn. 8th largest Employs 19 Employs 3 million million people- Commercial vehicle manufacturer in the world with annual people - directly & directly & production capacity of 8 million indirectly indirectly units 3 Source: Society of Indian Automobile Manufacturers (SIAM); Automotive Component Manufacturers Association of India (ACMA); Year 2016-17; 1 US$ = Rs. 65Auto Industry Overview : India India is the 5th largest motor vehicle manufacturing country after China, USA, Japan and Germany* includespassengercars,lightcommercialvehicles,minibuses,trucks,busesandcoaches Automotive industry contributes 7.1% to India’s GDP and 45 % to the manufacturing GVA ~29 mn. automobiles produced in India in FY18 of which ~ 25 mn. units sold in domestic market and ~ 4 mn. units exported; FDI worth $ 18.41 billion received between April 2000 to December 2017; 100% FDI allowed under the automatic route Indian automotive industry (including component manufacturing) is expected to reach $ 250-280 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 12% to India’s Gross Domestic Product# Source: Society of Indian Automobile Manufacturers (SIAM), Automotive Component Manufacturers Association (ACMA), *Organisation Internationale des Constructeurs d'Automobiles (OICA), 4 Department of Industrial Policy and Promotion (DIPP), Government of India; # -As per the Automotive Mission Plan 2016-26; 1 US$ = Rs. 65 ; GDP : Gross Domestic Product; GVA: Gross Value AddedAuto Components Overview : India • The Indian Auto components (ancillaries) – current market size is around $ 43 bn.; expected to reach US$115 billion in 2020-21 • The growth of global OEM sourcing from India & the increased indigenization of global OEMs is turning the country into a preferable designing and manufacturing base • India has emerged as a top exporting destination for OEM’s worldwide – USA(22%), Germany (7%), Turkey (6.2%), UK(5.1%) and Italy(4.1%) are major export destinations Composition of auto components supply to OEMS Auto components segmentation 3-wheelers Earth Moving Equipment 2% 2% Tractor 6% Passenger LCV Vehicles 8% 2-wheelers M&HCV M&HCV Passenger 11% Vehicles LCV 49% 2-wheelers Tractor 22% 3-wheelers Source: Automotive Component Manufacturers Association of India (ACMA); 1 US$ = Rs. 65 5Government of India : Policy Initiatives Automotive Mission Plan 2016-26 (AMP 2026) • AMP 2026 is the collective vision of the Government of India and the automotive industry on where the various segments of the automotive industry and auto component industry need to be by 2026 in terms of size and contribution to the overall Indian economy • The Indian Automotive industry to be one of the prime movers of Manufacturing sector and “Make in India” initiative • Specific interventions are envisaged to sustain and improve manufacturing competitiveness and to address challenges of environment and safety National Electric Mobility Mission Plan 2020 (NEMMP) • Encourage reliable, affordable and efficient xEVs (hybrid and electric vehicles) through government-industry collaboration • Provide fiscal and non-fiscal incentives to electric vehicle firms • Target of putting 6 million electric & hybrid vehicles per year on the road by 2020 • Faster Adoption & Manufacturing of Hybrid and Electric Vehicles (FAME Scheme) to promote EVs for public transport, commercial purposes and high-speed two-wheelers National Automotive Testing And R&D Infrastructure Project (NATRiP) • Focus on developing India as R&D hub by setting up R&D centers at an cost of USD 585 million to enable the industry to adopt and implement global performance standards • Focus on providing low-cost manufacturing and product development solutions 6 Source: Society of Indian Automobile Manufacturers (SIAM)Gujarat ScenarioAuto Industry Overview : Gujarat • Gujarat has emerged as a key investment destination for major automotive OEMs and ancillary companies • Government of Gujarat plans to increase the share of automotive industries in its overall engineering output to 10% by 2020, from the current 3.7% Becharaji • Share of automobile sector in Gujarat’s overall FDI received is 13% as Mehsana Kutch compared to 5% in India’s overall FDI Sanand Ahmedabad • Cluster development approach: Well-developed auto clusters in Ahmedabad - Dholera Sanand, Mandal-Becharaji, Hansalpur – Vithalpur, Mehsana, Vadodara-Halol, Halol Rajkot Rajkot Vadodara • Dholera Special Investment Regions (DSIR) will act as global investment destination, supported by modern infrastructure, premium social infrastructure, civic amenities, and centers of excellence • Sound base : 30 clusters comprising castings & machine tools, brass parts, oil engines & electric motors, bearings, auto-ancillaries • Locational advantage: ability to meet the demands of growing car markets globally on the back of strong car exports from India Automobile Clusters in Gujarat • Gujarat is also an ideal automobile export-hub with excellent port connectivity Delhi –Mumbai Industrial Corridor influence area through Kandla, Mundra and Pipavav 8Major investments across the auto sector in Gujarat Honda MG Motor Maxxis Maruti Motorcycles Ford India Honda India Hero Rubber Tata Suzuki and Description Pvt. Ltd. Cars India (SAIC MotoCorp India Pvt. MRF Motors India Ltd. Scooters (FIPL) Ltd. (HCIL) Motor Corp. (HMCL) Ltd. (MSIL) India Limited) (MRIPL) (HMSI) Sanand, Sanand, Hansalpur, Halol, Halol, Sanand, Location Vithalapur Vithalapur Bharuch Ahmedabad Ahmedabad Ahmedabad Vadodara Vadodara Ahmedabad Rs. 4,500 Rs. 6,000 Rs. 1,100 Rs. 2,640 Rs. 4,000 Rs. 1,070 crore crore Rs. 2000 crore Rs. 1,350 crore crore crore Rs. 13,400 crore crore (US$ 923 (US$ 308 mn.) (US$ 207 mn.) (US$ 170 (US$ 406 Investment crore (US$ 692 (US$ 615 (US$ 164 mn.) mn.) mn.) (US$ 2061 mn.) mn.) mn.) mn.) Two Tires & Product Cars Cars Cars Cars Cars Two wheelers Tires & tubes wheelers tubes 0.24 million 1 million 0.25 million vehicles and 0.75million Construction 20,000 tires Capacity 80,000 units 1.2 millionper 1.2 million tiresper vehicles per 0.27 million units per of the unit yet and 40,000 (in units) perannum annum perannum month annum engines per annum to commence tubes perday (est.) annum 1 US$ = Rs. 65 9Major Auto Investments: Gujarat Source: Automotive Component Manufacturers Association of India (ACMA) 10Gujarat : India’s emerging auto exports hub • Passenger vehicles exports from India—the second largest category after two wheelers—has been advancing at a compounded annual rate of 8.9% over the last six years. • Over 67% of export volumes comprised of two-wheelers, followed by 22% for passenger cars. • Gujarat, along with being an automotive manufacturing hub is also emerging as an export hub for auto and auto components given its excellent port infrastructure and connectivity • Many ports in Gujarat plan to further expand their infrastructure as well as increase its roll-on roll-off (RoRo) business on the back of strong car exports Value of exports of auto and auto components from Gujarat vis-à-vis share in India’s exports Value of exports of vehicles (USD bn.) Value of exports of auto components (USD bn.) 10 9.9 10.0 5 4.44 5.0 9 9.0 4.5 3.95 3.97 4.21 4.2 4.5 8 7.5 8.0 4 4.0 6.7 6.7 7 6.1 7.0 3.5 3.5 5.8 2.6 6 6.0 3 2.3 2.5 2.3 2.9 3.0 5 5.0 2.5 2.5 4 4.0 2 2.0 1.5 1.5 3 3.0 2.7 1 1.0 2 2.0 0.74 0.5 0.092 0.098 0.1 0.11 0.12 0.5 1 0.007 0.008 0.01 0.18 1.0 0 0.0 0 0.1 0.1 0.1 0.0 2012-13 2013-14 2014-15 2015-16 2016-17 2012-13 2013-14 2014-15 2015-16 2016-17 Value of India's exports in Billion USD Value of Gujarat's Exports in Billion USD Value of India's exports in Billion USD Value of Gujarat's Exports in Billion USD Percentage contribution Percentage contribution Source: Society of Indian Automobile Manufacturers (SIAM), Directorate General of Commercial Intelligence and Statistics (DGCIS), Govt. of India; 1 US$ = Rs. 65 11Electric Vehicles : The future of mobility • The Indian electric vehicles industry is at a nascent stage contributing to less than 1% of total vehicle sales; Potential to grow to more than 5% in the next few years • Major cities across India moving their public transportation fleet of buses to EV buses • Domestic manufacturing to get a boost from the $ 1.3 bn. (Rs. 8,730-crore) proposal to shift India’s public transport to battery-operated vehicles while mandating the local content in electric vehicles upto 70% across 3 years • Electricvehicles to create a $300 billion domestic market for EV batteries by2030 • Energy Efficiency Services (EESL) to procure 20,000 electric vehicles. Government of Gujarat has also signed an MoU with EESL to procure 8,000 EVs • Tata Motors is manufacturing the electric variant of its compact sedan Tigor at its Sanand facility in Gujarat which are being procuredby EESL • JSW Group has signed an agreement with Government of Gujarat to promote production of battery operated vehicles in the state along with the production of electric battery, storage solutions and charging infrastructure at an investment of $615 million • Suzuki, Toshiba and Denso will set up India’s first lithium-ion battery manufacturing plant in Gujarat with a total of $180 million • ELECTROTHERM (India) Ltd. (ET), from Gujarat was the first company to introduce electric bikes and scooters (Yo Bykes) in India. It has a manufacturing plant in Kutch District of Gujarat with installed capacityof 0.25 mn. p.a. • Adani Group is in discussion with Taiwanese electric bus manufacturer for technological tie-up to set up a manufacturing unit in its special economic zone at Mundra in Gujarat 12 Source: NitiAayog, Govt. of India, EESL ; 1 US$ = Rs. 65 ,Sanand : Gujarat’s Automotive Hub Sanand Industrial Estate spread across an area of more than 2000 hectares has catapulted Gujarat into the big league of automobile industry hubs with presence of several major multinational auto and auto component companies like Tata Motors, Ford, Maxxis Tires, Becharaji- Bosch, Magna, Magneti Marelli, Valeo, Japanese Motherson Sumi among others Industrial Zone Sanand: Ford, Tata Motors, The Sanand Industrial Estate provides robust Maxxis plants physical and industrial infrastructure & utility linkages with excellent Halol - road, rail, port and airport connectivity Upcoming SAIC plant Focus Sectors : Engineering, Automobiles & ancillary units, plastics, Semiconductors, Electronics 13Sanand : Gujarat’s Automotive Hub 14Indo Japanese Industrial Township @ Sanand III (Khoraj) Dedicated Japanese Industrial Park Overview Area-1750 acres Proposed Land Use: Industrial, Residential, Commercial, Focus Sector: Automobile & Ancillary, Engineering, and Recreational Pharmaceutical Distance from Urban Center: 20 Km from Ahmedabad Proposed Facilities An ecosystem of core manufacturing, allied industries, supporting facilities including testing labs, warehousing, logistic support etc. Dedicated housing zone for the units coming up in the Japanese industrial township Best-in class infrastructure – Excellent roads, including dedicated power, continuous water supply, and seamless communication Capacity building through training institutes and incubation centre 15Mandal Becharaji Special Investment Region (MBSIR) MBSIR Industrial hub being developed in north-west of Ahmedabad spread over an area of 102 sq. kms. A Japanese Industrial Zone is being developed at MBSIR which will be home to major auto companies like Suzuki Motor Corp., Honda Motorcycles and Scooter India Pvt. Ltd, and Toyota Tsusho India Airport Ahmedabad (89 km) Nearest Ahmedabad, Kadi, Urban Areas Surendranagar, Mehsana Nearby Ports Mundra (300 km) Kandla (240 km) 16Japanese Industrial Estate @ GIDC Mandal “Gujarat’s first Country specific industrial estate with an area of 123 hectares delineated for Japanese companies” International & Nearest Major Nearest Railway Government of Gujarat Location Mandal-Ahmedabad Domestic Airport Port Station has proposed rail District Ahmedabad Kandla Viramgam network as last mile connectivity to the Area 123 hectares 90 KM/SH 200-300 KM 30 KM region Nearest Major Nearest Auto Focus Engineering, Automobiles and City Component Hub Sector ancillary Ahmedabad Sanand 90 KM 70-80 KM Presence of Japanese Companies in the Estate Name of the Company Area in Sq m Name of the Company Area in Sq m TechnotrendsAutoparkPvt. Ltd 2,54,548 Murakami Corporation 30,953 MA Extrusion India 41,614 Topre Corporation 1,02,730 RokiMindaCompany 31,614 Sanko GusaiTechnology (I) Pvt. Ltd 28,998 TS Tech (Mandal Pvt. Ltd) 20,000 MunjalKiriu India Pvt. Ltd 38,021 17Dholera Special Investment Region (DSIR) DSIR will be the biggest beneficiary of Declared as National Investment DMIC and DFC Manufacturing Zone (NIMZ) DSIR Advantages: • Large & contiguous land parcels for industrial development • Total Notified Area: 920 sq.km. • Long term growth potential • Fully serviced plots – Plug & Play • Smart & Sustainable Social infrastructure Investment Opportunities: • Automobiles & Auto Ancillary • Defence & Aerospace • Heavy Engineering • Electronics, Hi-tech Technologies • Agro & Food Processing • Infrastructure Development 18Skill Development development Skill and training in auto sector is a focus area for Gujarat government Japan-India Institute for Manufacturing (JIM) • Aimed for human resource development in the manufacturing sector in India as part of the Manufacturing Skill Transfer Promotion Programme agreed between the governments of Japan and India • Maruti Suzuki JIM is operated as Industrial Training Institute (ITI) by Maruti Suzuki in Mehsana, Gujarat and aims to produce 400 graduates annually • The institute offers total eight 1-year or 2-year practical training courses including Motor Mechanic, Mechanic Diesel, Mechanic Auto Body Repair, Mechanic Auto Body Paint Repair, and Welder • Toyota Tsusho Corporation is also is planning to open a JIM in the Mandal Industrial Zone, Gujarat (to be run by Techno Trends Auto Park Private Limited) Skill University • A first of its kind private university established at Vadodara in collaborative arrangement with Team Lease Foundation • Aims to create an open and a flexible system which permits accumulation of productive knowledge and skills and the award of higher Diplomas and Degrees • Offers industry responsive academic programmes with active participation and involvement of industries in curriculum design, implementation, internship, assessment and job placement 19Skill Development Other initiatives • Hyundai Motor India Ltd. opened a State-of-the-art Regional Training Centre in Ahmedabad spanning across 8,200 square feet. It will provide specialized training to 1,700 service technicians that will empower them with both technical and soft skills • Industrial KVK (i-KVK) to create its own skilled workforce with the help of the government to meet their human resource needs, thereby increasing employability • To meet the rising demand for skilled workforce, Govt. of Gujarat has ventured into more than 40 Flexi MoUs with various companies like L&T Ltd., Tata Motors Ltd., Volkswagen Group India Pvt. Ltd., Mahindra Group, Eicher Motors, Toyota Kirloskar (India) Ltd., Royal Enfield, Siemens India Ltd. etc. • Under the High–tech Training Scheme, a training centre has been established in Vadodara with the support from Govt. of India, World Bank and GTZ to impart training to new-comers and industrial workers for upskilling • 20 Superior Technology Centres (for Industry Responsive Short Term Courses) have been established to train the youth in the latest technologies covering CNC, Automobile, Solar, Chemical. 20Gujarat policies aligned with ‘Make in India’ Snapshot of assistance under Gujarat Industrial Policy 2015 • Assistance to labor intensive industries • Special Incentives for Mega/ Innovative Projects • Assistance to Industrial Parks • Assistance to set up Logistics Parks • Assistance in Development of Common Environmental Infrastructure • Assistance to MSMEs and Startups • Assistance for R&D Assistance under General Incentive Scheme, 2016 • Tax (SGST) reimbursement based on quantum of investment and location of the project* All incentives and assistance schemes are applicable to the automobile and auto components sector *Govt. of Gujarat has announced that tax incentives will continue to be given under GST regime; quantum of assistance to be decided 21State Government Assistance for Micro, Small and Medium Enterprises Incentives under the Industrial Policy 2015 Assistance of Capital Assistance for Interest Subsidy Assistance for Venture Capital Assistance for Quality Investment Subsidy Certification 50% of capital cost for installing Assistance to raise promoter @ 10% and @ 15% on loan @ 5% and @ 7% for period of 5 Enterprise Resource Planning contribution in the form of amount in Municipal Corporation years in Municipal Corporation (ERP) system, for obtaining ISO equity or loan through GVFL areas and in areas other than areas and in areas other than certification, for obtaining WHO Municipal Corporation areas Municipal Corporation areas GMP, for testing equipment and respectively respectively machinery required Assistance for Technology Assistance for Patent Assistance for Saving in Acquisition Registration Consumption of Energy & Water 75% cost of energy/water audit Grant at the rate of 50% of cost of 75% of expenditure incurred for conducted in a unit & technology acquisition obtaining patents 25% of cost of equipment Source: Resolution No. SSI-102014-924840-CH; Date. 19.01.2015 22Investment Opportunities • India is the 4th largest passenger and commercial vehicles market (4.02 mn.units) in the world {China (29.12 mn.units), USA (17.58 mn.units) and Japan (5.24 mn.units)}and is expected to become the 3rd largest by 2026 • India is the 2nd fastest growing market for passenger vehicles globally, behind China, having expanded by 7% in 2017-18 • India offers huge growth potential due to low vehicle penetration (32 vehicles per 1000 people in 2015) and owing to its unique demographic dividend (66% of population under the age of 35) • Focus shift towards electric vehicles is likely to intensify product and technology development Seats, Door panels, Heating, Conventional Engine, Gear box, Axel, Ventilating, Air conditioning and Automobile – 2, 3 and Dashboard, Exhaust cooling manufacturing 4 wheelers, CVs, and system manufacturing Electric Vehicle manufacturing Other Auto components manufacturing EV components – battery & charging infrastructure Tire manufacturing Product Design and R&D 23For additional information connect us @ Industries Commissionerate Block No. 1, 2nd Floor, Udyog Bhavan, Gandhinagar, Gujarat, India - 382 010 http://ic.gujarat.gov.in/ Phone: 079-23252683 E-mail: comind@gujarat.gov.in Industrial Extension Bureau (iNDEXTb) Block No. 18, 2nd floor, Udyog Bhavan, Gandhinagar, Gujarat, India – 382 010 www.indextb.com Phone: 079-2325 6009 E-mail: md.indextb@gmail.com 24Thank you