International companies such as Volvo, Cummins, Navistar, Catterpillar and Delphi are holding talks with Indian automobile component makers for global sourcing contracts.

"Delegations from leading automobile component companies such as Volvo, Cummins Navistar, Caterpillar and Delphi visited India during the last six months and a few large Indian component manufacturers are in discussions with some them for global sourcing contracts," Minister of State for Commerce and Industry S B Mukherjee informed the Rajya Sabha on Monday.

He said under pressure to cut costs, multinationals were looking at countries such as India, China, Thailand, Malaysia and Brazil, which could offer low-cost automobile components.

Indian companies exported automobile parts and accessories worth Rs 1,636 crore (Rs 16.36 billion) during April-February 2002-03, compared with Rs 1439.72 crore (14.40 billion) during the same period in 2001-02. During 2000-01, export of automobile parts and accessories were estimated at Rs 1369.72 crore (Rs 13.70 billion).

The commerce and industry ministry has identified automobile components as an area with immense export potential in the medium term. Automobile component manufacturers said a majority of the components manufactured here were low-end and basic items. The components for the export market are, however, for high-end cars.

Commerce ministry officials said higher value items would be produced here as the features in the cars on Indian roads improved.

Indian companies were tapping the global market for a different set of products and were not necessarily selling spares which were manufactured for Indian automobiles, they added.

In the medium term export strategy, the government had proposed a multi-pronged strategy to push export of automobile components, initiate steps for improving productivity in small and medium-sized enterprises, initiate R&D schemes and explore the possibility of free or preferential trade agreements with Latin American countries, a potential market for automobile components.

None of the steps has, however, been taken up by the government so far.