Export contraction spares India’s auto industry a painful pinch | Chennai News
With the deteriorating economic scenario, shipments were already taking a hit. Said Pushan SharmaDirector, CRISIL Research: “Indian exports of automobiles (passenger vehicles, commercial vehicles and two-wheelers) and automotive components to Sri Lanka fell by 63% from Rs 2,377 crore in the financial year Rs 20 to Rs 874 crore in FY22, while the overall automotive sector exports increased by 16% from Rs 177,122 crore to Rs 205,685 crore during the same period.
A significant impact was seen in the two-wheeler segment, he added, “where exports declined from Rs. 1,244 crore in FY20 to a measly Rs Four crore in FY22.” Tuticorin is one of India’s 12 “major” ports and the second largest container handler on the east coast after Chennai.” Large volumes of export cargo sent to Sri Lanka from Tuticorin Port are not cleared at Colombo Port in over 60% of Sri Lanka’s domestic needs are shipped from the port of Tuticorin. The drop in exports is a recent phenomenon and coincides with the island’s descent into the economic mess. Said Shruti Saboo, Associate Director, India Ratings & Research: “Of all automotive vehicle and component exports, exports to Sri Lanka accounted for less than 1% (by value). While it was one of the top export destinations, especially for two-wheelers until mid-2020, it declined sharply after the imposition of an import ban by the Sri Lankan government. lankan. Even on the passenger car side, exports to Sri Lanka have declined significantly over the past decade due to intermittent import duties levied by their government.
The segment where exports have increased is tractors, light commercial vehicles and automotive components, all of which “increased on an annual basis. Some of the OEMs have even set up a manufacturing or assembly base there and are currently facing issues related to component sourcing and hence production,” Saboo added. However, being a low-cost vehicle market, the overall exposure of Indian OEMs is unlikely to be significant, she said.
The scene is no different, even for ancillary exports. Tire exports, for example, remained stagnant and then dipped into negative territory over the past 5 years, rising from Rs 110 crore in FY16-17 to almost Rs 90 crore in FY17-18, just over Rs 91 crore in FY18-19, nearly Rs 91.5 crore in FY19-20 and nearly Rs 45 crore in FY20-21. It then recovered to Rs 100.6 crore in FY21-22, but on a very low pandemic basis in the previous year.
According to the Society of Indian Automobile Manufacturers (SIAM), India’s exports to Sri Lanka have always been dominated by the two-wheeler segment. In fiscal year 2019-20, the export value of passenger vehicles and three-wheelers amounted to $40 million, while two-wheelers amounted to $176 million. “However, due to import restrictions in 2020, auto exports have declined significantly,” said Rajesh Menon, managing director of SIAM.