India's auto component exports is expected to grow by 15 percent in the current fiscal as there has been a continuous demand flow from the European markets, said the Automotive Component Manufacturers Association (ACMA), Executive Director, Vinnie Mehta.

"It is an interesting paradox that while the European economy is under stress, our export to Europe has continued to grow. Europe is one of the largest trading partners for India in the auto component sector and accounts for 35% of our exports," he told SME Times.

"We are closely monitoring the economy in Europe and keeping our fingers crossed," Mehta added.

ACMA said that if there would not be a crisis in the EU economy then the Indian auto component exports would have grown faster than what it is performing as of now.

During the fiscal 2011-12, the auto component exports are estimated to touch USD 6.7 billion. And, the overall growth of the auto component industry will be in the range of 8-10 percent touching about USD 47 billion in 2012-13.

ACMA said Indian economy is going through potential challenges in the form of rising inflation, high interest rates, power crisis, high fuel costs and high input costs. This is severely hurting the growth of the auto component industry. Not only this, it is affecting the much needed investments in the sector.

Mehta added, "This is indeed a concern to the industry. We hope there is a definite action from the government to bring the economy back on the growth track."

The government has provided export benefits to the industry recently in the Foreign Trade Policy (FTP) review which will help the industry to overcome the challenges. "The government's recent initiative will help the industry in the growth terms. As we can now import machinery at zero duty. Due to the rupee depreciation, the costs of the machinery has gone up significantly, which is hurting the industry. Due to the inflation, we are suffering tremendously against our competitor especially in China and Thaliand," ACMA mentioned.

On the FTP review Mehta also said, "In the Market Linked Focus products scheme 46 new products have been added and out of which 23 are auto components. Further, in the focused Product Scheme, 5 new auto components have been included by the government."

"This stands testimony to government's commitment to develop exports from the auto component sector in the country," he further added.