India has the potential to be a global automotive power. The Government of India (GOI) has formulated an automobile policy with a vision to establish a globally competitive automobile industry in India by 2010. Concerted efforts are needed to take auto manufacturing to a level of self-sustainability where the organizations shall have volumes, ability to develop the requisite technology and meet the evolving emission requirements. The auto components sector must also develop capacities, train and induct small-scale manufacturers and workers into the sector so as to compliment the efforts of auto manufacturers to be globally competitive. For this, the government may encourage the formation of co-operatives of small manufacturers to enable them to install an improved and environmentally-acceptable technology, which could be shared by them while doing hazardous jobs.

The government of India (GOI) has formulated an auto policy with a vision to establish a globally competitive automobile industry in India by 2010. The government also envisages that the automobile industry would double its contribution to the economy by the year 2010. Automobile industry in India is one of the major employment generating sectors in the economy. It is estimated that the domestic automobile industry currently employs about a quarter million people. In this, the contribution of auto-component manufacturers to domestic production and employment generation is substantial.

The component manufacturers mainly cater to two types of buyers, i.e., the original equipment manufacturers (OEMs) and the replacement segment. While demand in the former is dependent on the production of new vehicles, the latter, i.e., the replacement segment, is lucrative due to its size. And unlike the OEM segment, it is not cyclical. Moreover, realizations and profitability in the OEM segment are substantially lower than the replacement market.

Since the automobile component sector is ancillary to the automobile manufacturing industry, the fluctuations in the latter always have impact on the former. An increase in the production of vehicle by two million from 1999 to 2002 has also led to an increase in the domestic demand for automotive components. The new entrants in the mid-size car segment and continuing success of some of the automobile models helped in increasing sales volume in the OEM division.

Management Research Journal, Indian Automobile Component Industry, Government of India, GOI, Automobile Manufacturing Industry, Society of Indian Automobile Manufactures, SIAM, Marketing Strategy, Research and Development, R&D, Multinational Companies, Strategic Planning, Automobile Electrical System, Environment Protection Act, Basel.