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Airbag industry to more than double in worth to Rs 6,000-7,000 crore by FY27, says ICRA

New Delhi: Helped by regulatory requirements and a voluntary increase in the number of airbags per vehicle, the market size of the airbag industry in India is expected to more than double to Rs 6,000-Rs 7,000 crore by the 2026-2027 financial year, credit rating agency ICRA said in a report Tuesday.

According to the rating agency, the industry will grow at a four-year compound annual growth rate (CGAR) of 25-30 per cent, from the current levels of Rs 2,400-2,500 crore.

However, it also noted that building manufacturing capacity will be crucial to meet regulatory guidelines, as about 60-70 per cent of airbag components are currently imported, including the inflator which accounts for nearly half of the airbag’s cost.

The mandatory content per vehicle for airbag manufacturers is expected to rise from the current Rs 3,000-4,000, to Rs 8,000-10,000 by 1 October, 2023, according to Vinutaa S., vice president and sector head, ICRA.

According to Vinutaa, the average number of airbags per car sold is about three currently, and this is expected to increase significantly post the mandatory implementation of six airbags per car from 1 October, 2023.

This will also lead to an increase in cost for vehicle manufacturers, depending on modifications required in cars’ structural changes and deployment of additional sensors, she added.


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‘Building capacity crucial’

One airbag per car (driver airbag) was made mandatory in India in July 2019 onwards and this was increased to two airbags (dual front airbags) for M1 category vehicles January, 2022, onwards. M1 vehicles largely include all passenger vehicles, and are defined as motor vehicles used for the carriage of passengers, comprising not more than eight seats.

The government now proposes to make six airbags mandatory in passenger cars, from 1 October, 2023, onwards. “…from October 1, 2023, two side airbags and two side curtain airbags have been mandated, for preventing torso injury for people occupying front row outboard seating positions and prevent head injury for people occupying the outboard seating positions,” ICRA noted.

It added that building capacity in the next one year is crucial to meet regulatory deadlines, and estimates a capex of Rs 1,000-1,500 crore in the next 12-18 months for capacity upgrades and localisation.

ICRA noted that there is immense scope for localisation and development of tier-II vendor ecosystem in this space and increasing volumes could make this economically viable.

“Unless there is adequate backward integration for the incremental airbags expected to be produced, the import content would only increase further going forward,” ICRA said.

Vinutaa added: “Capacity building in the next one year is critical to meet regulatory requirements in a timely manner. Several players have started undertaking capacity enhancements in the last 6-8 months to gradually scale up their facilities, and ICRA expects a capex of Rs. 1,000-1,500 crore in the next 12-18 months for capacity enhancements and localisation measures.”

(Edited by Poulomi Banerjee)


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Source: The Print

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