Increase trade opportunities for Italian exports to India, present and promote Italian products in the automotive components industry in India. These are the objectives that led the Italian Trade Commission (ICE) to organise an official delegation to the Auto Expo fair, which will take place in New Delhi from 10^th -17^th January 2008. The event is one of the biggest exhibitions for the car industry in Asia and is a major showcase for the launching of new models on the market. In 2006 at Auto Expo there were 1,150 exhibitors over a 70,000 square metre exhibition area, which attracted 11,000 visitors from 25 nations.

The Indian market offers an interesting growth perspective for the automotive industry as a whole, and for the Italian one in particular. There are only 7 car owners for every thousand passengers: half of those in the Chinese market and 80-100 times less than in mature Western economies such as Germany, the US and the UK. Yet, according to the latest statistics, the Indian automotive sector has the potential to become one of the five largest in the world by 2025. Today India is already the second largest world market for two-wheelers, the fourth for commercial vehicles and the eleventh for private cars (but by 2016 it should become the seventh).

The rate of increase in unit car production is well over two figures (+30% year-on-year according to latest figures), while in the major car producing countries (Japan, Germany and France) output increases by only a few percentage points. In absolute terms production volumes are still low, slightly over one million units: but there seems to be an endless domestic demand to be matched before saturation point is reached. In the first seven months of 2007 (ICE data) the value of Italian car exports to India increased by 94% to 74.14 million euros: over half the rate of growth for Italian exports to China in the same period (+44.6%), which had a similar value (108 million euros).

Italian car firms have already taken advantage of the real opportunities to work in partnership with Indian companies, as some important manufacturing deals demonstrate. In July 2006 the Fiat Group signed an industrial alliance with Tata Motors, India’s major car producer. Furthermore, in the last few weeks Tata’s executives in Europe have hinted that the joint venture between the two groups might include the possibility of fitting Fiat engines on the car that Tata plans to launch in Europe in 2009. Existing agreements provide for the assembly of the Grande Punto and Linea models in India, the use of Fiat’s plants for pick-ups in Argentina by Tata and cooperation with Iveco in the field of commercial vehicles.

Italian firms can also play a leading role in the supply of automotive components. According to recently published figures, in 2006 the turnover in this sector increased by 9% compared to 2005. Italian automotive industries have a strong propensity to export: of over 100 firms, 72 sell their products outside Italy. In 2006 the Italian trade balance under the “automotive parts and accessories” item showed a 5.5 billion euros surplus.

The main destination for Italian automotive components is Western Europe, followed by Central Europe and the US. In the last three years new trade channels were opened first and foremost in Western Europe (39% of all cases), as well as in Eastern Europe (21%) and Asia (20%), showing that Italian firms in this industry are looking eastward. India, therefore, is an opportunity waiting to be seized.