“While the awareness for sustainability will go up, a downstream push in collaboration will ensure that the industry becomes sustainable,” said Shradha Suri Marwah, President, ACMA and Chairperson & Managing Director, Subros Limited.
She added that as the Government pushes the industry towards sustainability, awareness amongst the players and its advantages on both the top and bottom line will generate interest amongst the players on sustainability.
Adding to this, Sunjay J Kapur, Chairman Sona Comstar and the association's past President, stated that sustainability is no longer merely a discussion topic but is also being implemented in the real world.
Interestingly, he pointed out that while there were about 100 policies on sustainability in 2000, it has now come up to 900 by 2023, showcasing the government's push towards creating a greener and cleaner future.
While regulations drive sustainability in the industry, it is also being driven by consumers and employees, he added. There has been an increase in demand for alternate fuel option vehicles; meanwhile, companies have increased sustainability's importance.
Brajesh Chhibber, Partner, McKinsey, while presenting the ACMA-McKinsey study ‘Mobility 360° – Sustainability for Competitiveness’, stated that sustainability was among the top five KPIs for most Tier-1 suppliers. He said this is a big change as three to four years ago, these suppliers only considered sustainability as an option.
Meanwhile, OEMs are discussing sustainability from their standpoint and supply chain. These OEMs’ RFQ is asking for decarbonisation specifically in the responses going forward, added Chhibber.
Marwah believes it will be impetus from customers going ahead where they will mandate sustainability to be part of the RFQ.
Sustainability: An Imperative Rather Than A Choice
The new ACMA president considers sustainability an imperative rather than a choice in today’s age. “There are clear advantages in actually doing this,” she said. While working in accordance with sustainability goals will allow the suppliers to secure a greener and cleaner future, it will also add to a lot of cost reduction, Marwah stated.
She continued that with sustainable goals, while there is an emission reduction, which is very important, “but more importantly,” the whole material circularity not only reduces the costs but also adds to productivity. Kapur added that circularity and circular economy possess a whole new sphere of opportunities for the suppliers with a push towards recycling materials.
Another key advantage of achieving sustainability is that it will help improve the nation's exports. While the auto component industry has seen a 33% YoY growth in FY23 to nearly $70 billion, the exports more or less have remained at the 30% mark with a valuation of $20 billion. While the export figures are quite respectable as per the past President, they can further increase if the sustainability focus increases.
Vinnie Mehta, Director General, ACMA, said that while US and Eupore constitute 30% each in terms of exports for the Indian auto component industry, the industry has to make itself compliant with what the customers want, which is sustainable solutions and for that, an ecosystem-based approach is needed.
Way Forward
Shivanshu Gupta, Senior Partner, McKinsey, believes there has been good growth in moving towards a sustainable future amongst the Indian auto component players. As per the report by ACMA and McKinsey, 94% of capital being infused is sustainability-related every year, and 64% of employees prefer to work in companies with sustainability goals and policies.
Kapur believes that investment in technologies will play a key role in building the momentum forward. 'The more we invest in technology, the more opportunities the industry is going to be able to capture,' he added.
However, spending on R&D in the Indian industry is about 0.6-1%, while globally, it is 6%. The industry needs to focus on more investment in R&D and future technologies, Kapur said.
He continued, “When you look at investment in technology and new technologies, you need scale. And scale is really what's available outside of India, when you look at it, electrification and all the other stuff that comes with it, whether it's telematics and connectivity, etc,” he explained.
Amitabh Kant, Sherpa G-20, stated during the 63rd ACMA annual conference, “The journey of the auto industry is not just about innovation and competitiveness but also about redefining the mobility space, one that is digital and sustainable.”
He added that the Indian Government is looking at INR 26,000 crore investment to be made on auto components and INR 80,000 crore in batteries. These will further boost the growth of the industry, Kapur believes.
ACMA’s Role
Mehta believes that while investment in technology will help the industry move towards sustainability, ACMA as an organisation must create awareness amongst its members. This is being done through various cluster programmes on sustainability and its effects. It also has programmes with startups while working with PwC, looking at the whole ecosystem because much technology is being generated from the startups.
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