ICRA expects the airbag market to reach INR 7000 billion by FY27
One of the fastest-growing vehicle component markets is the airbag sector. It is anticipated to gain from the rise in content per car brought on by stricter regulatory standards and a voluntarily increased number of airbags per vehicle for safety purposes.
ICRA predicts that the industry will expand from its current size of INR 2,400-2,500 crore to INR 6,000–7,000 crore by FY27, at a four-year CAGR of 25–30%. From July 2019, only one airbag per vehicle (the driver’s airbag) was required. This was increased to two airbags (dual front airbags) for category M1 vehicles manufactured after January 1, 2022 (vehicles that can seat up to eight passengers and weigh less than 3.5 tonne).
Two side airbags and two side curtain airbags are currently mandated for M1 category vehicles that will be manufactured beginning October 1, 2023, to prevent torso injury for people occupying front row outboard seating positions and head injury for people occupying outboard seating positions.
The necessary content per vehicle for airbag makers is anticipated to increase from INR 3,000–4,000 today to INR 8,000–10,000 by October 1, 2023, according to Vinutaa S, Vice President and Sector Head, ICRA. Currently, there are around three airbags in each automobile sold, but from October 1, 2023, when six airbags will be required, it is anticipated that this number would rise dramatically. The price for OEMs can go up even more depending on the structural changes that need to be made to automobiles and the deployment of more sensors.
Localization And Development Potential
The cushion and other components make up the remaining costs of the airbag, which are around 50% of the total. Due to a lack of suitable volumes and indigenous technological capacity, the sector now imports 60–70% of its components, typically from foreign parents or joint venture partners.
Unless there is sufficient backward integration for the additional airbags anticipated to be produced, according to ICRA, the import content will only rise going forward. Increasing the volume might make this profitable. By adding more value, it can increase profits and make the supply chain less difficult for airbag producers. Manufacturing airbag components is included in the PLI program’s efforts to promote an increase in domestic manufacturing.
Most airbag producers are localising essential components due to the possibility for a multiple rise in airbag volumes. “Capacity building in the upcoming year is crucial to meeting regulatory requirements on schedule,” Vinutaa continued. ICRA anticipates capex of INR 1,000-1,500 crore in the next 12-18 months for capacity upgrades and localization efforts. Several firms have begun capacity enhancements in the last 6-8 months to gradually grow up their facilities.
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