The future plans for Indian Auto Component sub sector is very bright. The estimated 18 production turnover and exports presented in table from the FY 13 to FY 17 with a CAGR of 11% and 19% respectively.
The Vision 2021 is having encouraging growth prospects with a estimated turnover of 113 USD billions comparing with over 40.6 USD billions in FY 12 with a CAGR of 12% , likewise on Export calculated CAGR arrives at ~16.6%.
There has to be proportionate capital investment for the estimation to attain apart from improving market demand – domestic and export –with reducing import content to propagate the importance to indigenize leading to being self reliant, fewer outflows of Foreign Exchange and employment generation in this Auto Component Industry.
FINANCIAL YEAR 2012-13 2013-14 2014-15 2015-16 2016-17
SOFT LOAN FROM FINANCIAL INSTITUTIONS 1000 1250 1500 1750 2000
COST OF 4% SUBVENTION PER YEAR – IN CR 40 50 60 70 80
Essentially Capital investment became a necessity to make domestic industry more competitive with regards to high technology component development. To assist domestic auto component manufacturers to access finance at reduced rate of interest in modernization or upgradation or technology acquisition leading to become more competitive, a new scheme titled “Technology Up-gradation and Development Scheme (TUDS) is proposed by the working group on Automotive Industry for the 12th Five Year Plan (2012-17) under Ministry of Heavy Industries and Public Enterprises. This envisages the creation of ‘Auto Component Technology Development Fund (ATDF)’ and would be facilitated to finance 50% of the project cost by way of soft loan with an interest subvention of 4% to be in this corpus fund. The estimated investment by the auto component manufacturers in the five year period 2012 – 17 is Rs.15,000 crore; of which Rs.7,500 crore was contributed by the auto component industry and the other part Rs.7,500 crore (Distribution indicated in table 11) was financed through soft loans from Financial Institutions with 4% subvention proposed to be borne by the Government of India.
So from the above given data we can assume the following values-
FINANCIAL YEAR 2017-18 2018-19 2019-20 2020-21
SOFT LOAN FROM FINANCIAL INSTITUTIONS 2250 2500 2750 3000
COST OF 4% SUBVENTION PER YEAR – IN CR 90 100 110 120