Auto component SMEs face huge challenges: ACMA Exec Director | SupportBiz

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Auto component SMEs face huge challenges: ACMA Exec Director

Even with shrinking margins, the automobile component market is a significant contributor to India’s GDP. SMEs represent the major chunk of Indian automobile components market. The industry's output touched the figure of US$39.9 billion in terms of turnover for the 2010-11 fiscal year, with a growth rate of 33 percent compared to the 2009-10 fiscal year.


Although the profit margins of auto component SMEs are consistently becoming thinner, the industry is moving in the positive direction. Automotive Component Manufacturers Association (ACMA) is an association that acts as a nodal agency for this industry and it represents around 650 companies from this segment. Around 70 per cent of ACMA’s members are SMEs. 

Vinnie Mehta, Executive Director of ACMA, speaks to Faiz Askari, Editor North at SupportBiz regarding issues affecting the segment.

SMEs are vital in this industry. What is the status of SMEs in the auto component sector?

During the financial year 2009-10, the size of the auto component sector was almost USD40 billion, while exports stood at USD5.25 billion. This industry has witnessed the growth at 14 percent. Due to constantly reducing profit margins in the industry, SMEs face huge challenges.

What are the key challenges that automobile companies are facing?

There are several challenges that this industry is facing. But the top challenges are - access to easy capital, cost of capital, availability of skilled manpower, access to technology and inadequate infrastructure. Availing expertise is also a challenge and above all scalability is a great challenge for SMEs operating in the automobile component market.

I feel that SMEs should scale up operations, which will in turn help strengthen the productivity levels. Entrepreneurs have to make smart decisions in order to achieve growth. Apart from this, SMEs in the automobile components industry also need to focus on R&D.

Standardisation is driving the automobile industry. How are Indian companies prepared for the latest global industry standards?

In terms of technology, globally the industry is moving towards emission norms stage 5 and stage 6 however, in India we are still at stage 3 and 4 in terms of emission norms. However, the Indian companies have great amount of credibility at the global level.

In India, we have witnessed rapid achievements of world-class quality systems by having ISO 9000/ISO 14001/QS 9000/TS 16949 quality systems.

Till date 576 ACMA member companies have been certified with ISO 9000, 208 companies awarded ISO 14001, 467 companies have been certified with TS 16949, 105 companies have been certified with OHSAS 18001.

Fifteen companies have won the TPM Award, 12 companies have won the Deming prize, and one company has won the Japan Quality Medal. While one company has won the Shingo Silver Medallion and three companies have won the JIPM Excellence award.

What roadmap do you foresee for this industry?

I believe that the industry is graduating towards more serious work in the field of product development. More instances of intellectual property will be registered from India. Our industry has great potential to become world famous for small vehicles.

Accessing expertise and quality networking is a big issue faced by SMEs in this industry. ACMA has a strong commitment towards this. Please highlight your activities in this direction.

ACMA plays an important role in the promotion of the industry and business development. We successfully run the ACMA Centre of Technology (ACT), which spearheads the drive for quality, productivity and technology. We have highly qualified councillors on our rolls for the said purpose.

We are actively involved in trade promotion, technology upgradation, quality enhancement and collection and dissemination of information which has made ACMA a vital catalyst for this industry's development. The other activities include participation in international trade fairs, sending trade delegations overseas and bringing out publications on various subjects of topical interest to the automotive industry. In addition to the above, ACMA also undertakes cluster programmes with definite roadmaps. These programs are highly customized and could be focussed on specific companies.