Airbags along with ABS are one of the most basic safety equipment in a car in India. While dual front airbags are mandatory till now, the government is preparing to mandate the application of six airbags in passenger cars. While the new norms will make cars costlier, it will also help the airbag industry to flourish. According to rating agency ICRA, the airbag industry is expected to grow roughly three times. From the current size of Rs 2,500 crore, the industry will grow to Rs 7,000 crore by FY2027. in content per vehicle arising from higher regulatory requirements and a voluntary increase in the number of airbags per vehicle to enhance safety,” Iqra said in a statement.
“Compulsory material costs per vehicle for airbag manufacturers are expected to increase from Rs 3,000-4,000 at present to Rs 8,000-10,000 by October 1, 2023. The average number of airbags per car sold is around three at present, and is expected to increase significantly. This is expected to be followed by mandatory implementation of six airbags per car from October 1, 2023,” said Vinuta S, vice-chairman and sector head, ICRA.
Accordingly, ICRA said it expects the industry to grow from the current level of Rs 2,400-2,500 crore to Rs 6,000-7,000 crore by FY27 at a four-year CAGR (compound annual growth rate) of 25-30 per cent.
The rating agency pointed out that earlier, only one airbag per car (driver airbag) was mandatory from July 2019. This increased to two airbags (dual front airbags) for category M1 vehicles (vehicles that can seat up to eight passengers and weigh less than 3.5 tonnes) manufactured from January 1, 2022.
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Going forward, two side airbags and two side curtain airbags have been mandated for M1 class vehicles that will be manufactured from October 1, 2023, to prevent torso injury to occupants of the front row outboard seating positions And to prevent head injury for people sitting outboard. Sitting position, it’s gone.
Vinuta said the OEM (original equipment manufacturing) cost could further increase depending on the structural changes to the cars and the modifications required in the deployment of additional sensors. Further, he said that capacity building in the next one year is important to meet the regulatory requirements in a time-bound manner.
Vinuta said, “Many companies have started capacity additions in the last 6-8 months to gradually scale up their facilities, and ICRA is looking to add around 1,000-1,500 employees over the next 12-18 months for capacity addition and localization measures.” Expected capex of Rs. Added.
Icra reports that the inflators make up about 50 per cent of the total airbag cost, while the cushion and other components make up the rest.
The industry currently imports 60-70 per cent of its components, mainly from overseas parents/joint venture partners, stemming from lack of indigenous technological capability and absence of adequate volumes.
“Until there is sufficient backward integration to produce incremental airbags, import content will only move forward,” ICRA said.
With inputs from PTI