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Auto Ancillary Sector Stocks in India

The auto ancillary industry in India is over US$ 50 bn in size as per IBEF. It's quite large and as such, is critical part of the Indian economy.

The industry is about 7.1% of India's GDP and employs about 5 million people in the country.

It's also one of the biggest exporting industries in India. The industry exports over 25% of its annual output.

India has emerged as a global auto component hub and the industry has set an ambitious export target of US$ 80 bn by 2026.

The auto ancillary eco-system in India is fairly robust and mature with a large number of companies operating in various niches. Some of these firms are world class. Within the industry, India has a competitive advantage globally in areas such as fasteners, bearings, and shafts.

India also has a labour cost advantage of about 15-20% over western nations in the global auto component market.

Government policies toward the industry over the years have been favourable. 100% FDI is allowed under the automatic route.

The recent trend towards electric vehicles had brought opportunities as well as challenges to the industry. Many firms will face a disruption in their business models while others will be relatively unaffected.

A large domestic market, solid advantages in the export market, a rising middle class in India with growing spending power, are the main driving forces of the Indian auto ancillary industry.

For a list of auto ancillary stocks in the Indian stock market please click here.

Also do read Equitymaster's auto ancillary sector report.

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