IANS | 12 Jul, 2023
India Inc saw just 16 deals amounting to $98 million in the second
quarter (Q2) this year in the auto sector, registering a substantial
decline in overall deal activity, with a 92 per cent drop in values and
36 per cent decrease in volumes, a report showed on Wednesday.
Primarily
influenced by the private equity (PE) segment, the automotive industry
in India has entered a transformative phase, embracing alternative fuel
technologies and innovative mobility solutions in the EV era, according
to the report by Grant Thornton Bharat.
The sector recorded a 21
per cent growth (year-on-year) in domestic sales in FY 2022-23 across
all vehicle categories and exhibited a strong presence within the EV
sector, crossing the 1 million mark in sales and registering an
exceptional 154 per cent YoY increase this fiscal year.
However,
the PE trend experienced a decline of 20 per cent in deal volumes and
an 81 per cent decline in values in Q3 compared to Q2 2022.
“As
India gears up to host COP28, and has assumed the G20 presidency, the
country stands at a remarkable crossroads of opportunity. The projected
investment opportunity ($200 billion by 2030) within the EV sector alone
highlights the drive for indigenous production, value chain
integration, and customised solutions,” said Saket Mehra, partner and
national sector leader, automotive industry, Grant Thornton Bharat.
Prospects
in green hydrogen, clean energy, and mobility solutions attract immense
investor interest, potentially creating a multi-billion-dollar market
by 2030.
“The Indian automotive sector is poised to maintain a positive investment outlook in the medium-to-long term,” Mehra added.
Persistent
global macroeconomic factors, including inflationary pressures and
heightened interest rates, further contributed to the overall decline in
deal activity within the auto sector.
Most of the PE activity was
driven by the emergence and integration of advanced technology-aided
business sectors such as electric vehicles, mobility-as-a-service, and
auto-components (mostly focused on EV components).
As the
auto-component industry transitions from internal combustion engines
(ICE) to EV, there are market opportunities in the US and Europe for the
auto-component sector, paving the way for cross-border M&As in the
short-to-medium term, the report mentioned.
