NCR remains as hot spot of auto components industry

The National Capital Region (NCR), which includes Delhi and several districts of Haryana, Uttar Pradesh and Rajasthan, with its long history of automotive component industry and over 50 industrial clusters, contributes 30% to the total vehicle production in the country.

North India has historically been ground zero for the automotive industry ever since manufacturing began. The country’s largest car manufacturer Maruti Suzuki India chose Gurgaon in Haryana to establish its first plant, and attracted a large number of ancillary companies to the region. Later on, the Japanese automobile giant Honda Motor set up its twowheeler plant in Gurgaon, and a car plant in Noida. The region produces over 30% of the cars and 50% of two-wheelers in India. There is an increase in the number of component manufacturers in accordance with the large number of OEMs.

The region has earned the trust of the industry. It is unlikely that this share might fall in the near future because of the new and emerging hubs in other States like Gujarat, Maharashtra and Tamil Nadu. This is because of the projections set in the Automotive Mission Plan 2026. There are around 3 million cars and 16 millions two-wheelers. And these numbers will increase. Within North India, the industry has witnessed the emergence of new hubs after land acquisition became tough in NCR. Various state governments such as Himachal, Uttarakhand and Madhya Pradesh (Indore) offered tax benefits and other incentives to attract investments.

As acquisition of land and other resources became difficult, the industry began looking elsewhere within the region. However, manpower – both skilled and shopfloor workers – has been easily available since the region has large number of engineering colleges with Uttar Pradesh taking the lead. Also on the infrastructure front, the expansion of Tapukara and Gurgaon-Jaipur Highway is the best bet after Himachal and Madhya Pradesh.

Delhi-Mumbai Industrial Corridor (DMIC) is a mega infrastructure project aiming high-speed connectivity between Delhi and Mumbai. DMIC and Dedicated Freight Corridor (DFC) will be a necessary addition to the infrastructure in NCR. Under DMIC, 3 investment regions in NCR are proposed: Dadri-NoidaGhaziabad Investment Region in Uttar Pradesh as general manufacturing investment region, Manesar-Bawal Investment Region in Haryana as auto component/automobile investment region, and Khushkhera-BhiwadiNeemrana investment region in Rajasthan as general manufacturing / automobile / auto component investment region.

The industrial activities in the NCR have undergoneg significant structural changes over a span of 3 decades or more. The primary industrial sector locations in the NCR are Meerut, Ghaziabad, Gautambudh Nagar, Bulandshahr, Delhi, Gurgaon, Manesar, Bawal, Faridabad, Kundli, Sonepat, Murthal, and Panipat. There are more than 50 industrial clusters in NCR besides a number of micro enterprises in NCT Delhi. The approximate number of people employed in the region

would be about a million. The presence of more clusters in a region shows higher competitiveness of the economy. NCR has a total of 53 such industrial clusters, of which maximum numbers are in the Rubber & Chemicals industry, while Auto Component clusters have maximum number of units (25,900). Industrialisation in NCR is concentrated in the sub-regions of Uttar Pradesh (general manufacturing), Haryana (automobile, electronics, and Handloom) and Rajasthan (marble, leather, and textile). The region accounts for a substantial part of the country’s production of cars, motorcycles, and tractors. Industrialisation in and around NCR is expectedp to receive further boost through the proposed creation of Special Economic Zones (SEZs) and industrial zones.

The market dynamics is favourable to the industries especially to automotive industries. Be it the aftermarket or the OEMs the contribution factor and the business development would be evenly spread across the country. Delhi being the capital city indeed has certain advantages compared to the other regions. The population is high and labourers can be easily accessed. The two-wheeler and four-wheeler market is high in this region. Commercial vehicle industry is also evolving due to Ashok Leyland and Tata Motors.

The industrial developmentp of NCR began in the 1980’s when Honda started its manufacturing facility in the region. Almost 3 decades now the industry is flourishing and the ecosystem is conducive for industrial establishments. Delhi-Gurgaon road has become the lifeline of the automotive industry and the government is supporting the same with the infrastructural support.

The automotive numbers are enthralling basis The ‘Automotive Mission Plan 2026’ estimates that the passenger car segment will reach 13 million and two-wheelers 19-20 million from the current 6 million. The commercial vehicles also are expected to soar high. The component industry will gain momentum proportionately. Investments are going to be very huge.

According to Vinnie Mehta, Director General, ACMA, the NCR region contributes 50% to the passenger car segment. The region gets a boost from the central government in terms of tax haven. To highlight Pantnagar from Uttarkhand is now reaping the benefits. In spite of that for the component makers there are several challenges like the highway infrastructure and regional road development. The industry is looking forward to the government for better infrastructure in the rural belts in addition to the highways. Retaining the investors is more important than attracting them.

The contribution of NCR towards India’s GDP and its rapid evolution as a commercial centre has made it an empirical component of the national economy. In order to sustain this growth and to provide a sustainable economic superstructure for the future, it is necessary to design a vision for the region. The broad concept of this exercise is to identify, list and profile a sustainable NCR with differential economic activities.

The Cover Story of the current issue is on the auto component industries in the Northern Region. In an exclusive interview Rattan Kapur, President, ACMA, said that the aftermarket in India stands at around $8 billion and is expected to exceed $13 billion by 2020. As per the Automotive Mission Plan 2026, the set target is $32 billion (by 2026). So, clearly we are looking at aftermarket to scale up very sizeably in the coming years. “I think it is becoming a part of everybody’s portfolio. It is a de-risking portfolio to spread so I think it is an important market and it is here to stay.”

A large number of auto component industries in the region cater to both the OEMs and aftermarket. Among them are: Prayag Polytech, a leading supplier of masterbatches since 1996, ASK Automotive Pvt Ltd, a leading manufacturer of friction products, Bollhoff Fastenings Pvt. Ltd., Nipman Fastener Industries, manufacturer of standard and special fasteners for the automotive and auto component industry, CI Automotive, the manufacturer of plastic accessory components for two-wheelers and four-wheelers, and Sandhar Technologies Ltd., a diversified auto component manufacturing company.