India's rapidly growing auto components sector seems to have hit a bumpy road with several auto giants including Hyundai Motor, the country's third largest automaker, set to replace many of its domestic auto parts vendors with South Korean suppliers, allegedly because the Indians have failed to maintain global standards in spite of receiving repeated warnings.

Indian auto manufacturers heavily source components from local vendors. And a decline in the quality of components implies a consequent decline in the final products available to consumers.

Already the warranty on new vehicles purchased by consumers in India is less than what consumers abroad avail. In the United States, companies offer a three to four years warranty on new cars. Companies in India offer just a two-year warranty on automobiles. Auto companies, especially the big players, recognise the importance of maintaining international reputation.

A globally competitive auto component sector is essential for this. This sector has grown from a $3.2 billion industry in 1996-97 to over $10 billion currently. Apart from Indian manufacturers, foreign auto majors are also increasingly sourcing components from India. The industry is a significant foreign exchange earner for the country.

Exports of auto components have risen from $330 million in 1997-98 to $1.8 billion in 2005-06. The sector played an important role in shaping India as a globally competitive manufacturing destination and is one of the country's significant industries next to IT. Sustained commitment to global standards is essential for continuing growth of this sector.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

Free Member, Joined :02/02/2007
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