One of the key reasons driving this is that domestic companies are lowering the prices of their products to gain more volume. For this, they are looking at low-cost countries like India to outsource materials, according to Les Parfitt, manager, international, at the Society of Motor Manufacturers and Traders.
Leading a nine-member automotive mission to India, Parfitt said the UK companies started the cost reduction exercise last year, and this year they would formalise the outsourcing plan from India.
The delegation consists of companies ranging from two-employee firms to multinationals.
India and China are low-cost destinations and it will be difficult for the UK companies to sell volume products in these countries. On the other hand, the UK firms can supply to India high technology products for the local automotive industry, he said.
Bilateral trade between India and UK in the automotive sector reportedly increased to about £30m in 2003/04 compared to £20m the year before.
For fiscal 2004/05, the number is likely to remain at around £30m.
The target for the UK trade and investment in the automotive sector was to have around 50 partnerships between the two countries. So far, around 30 partnerships have materialised, and hoped to reach 50 by the fiscal end.