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GLOBAL SOURCING WILL INCREASE TO $20 BN
The multi-billion dollar auto component sourcing industry in India has brought relief to many domestic component suppliers in the form of improved margins and long-term supply contracts.
Global auto majors such as Daimler, General Motors, Ford, Volkswagen, Renault, Nissan and Honda have been buying higher quantities of components from India, which has resulted in the margins of component firms improving 8-10 per cent.
As of the last financial year, auto component sourcing has touched $3 billion in India and is expected to doubled by next financial year-end. Many such auto majors have set up an India purchase office, which buys inexpensive Indian components to cater to their huge overseas plants. Such sourcing has provided Indian players with the opportunity to charge a premium that varies between 5 and 10 per cent.
Not only have the margins improved due to premium pricing, but volumes have grown significantly, too. These players get a benefit of 20 per cent cost reduction for our products.
According to projections made by the Auto Components Manufacturers Association, global sourcing from India will increase to $20 billion by 2014.
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