At the recently concluded Auto Expo in Delhi, Chinese componentsmakers were out in force with a 100-plus exhibitors taking up 5,000square metres of display space. From truck engine manufacturer FAWGroup to small- and medium-sized players, like gear-box makerWeichai Power, all had queued up. It signals the growing importanceof the Indian market for the Chinese components industry. In 2008-09 alone, imports from China stacked up to Rs 2,000 crore. We try tounderstand the implications of this incipient trend.
Why India?
India is fast becoming an attractive destination for Chinesevendors as the domestic auto industry has recovered swiftly from theaftermath of the economic downturn.
Who's buying?
Several large companies such as Tata Motors, Ashok Leyland, BajajAuto and TVS Motors are among those buying from the Chinese. Andtheir ranks seem sure to swell. Some Indian automakers have even setup procurement offices in China to pare costs.
What's the benefit?
The landed price of Chinese components is on an average 35 percent lower than components sourced locally. On quality, too, theChinese seem to be meeting the standards of the Indian autoindustry.
What's the impact on domestic components industry?
Already, Indian components makers are worried that the Chinesewill hurt their business and are seeking more protection. They feelthe 10 per cent import duty is too low. Says Vishnu Mathur,Secretary-General, Automotive Components Manufacturers Association(ACMA): "We can ask the commerce ministry to help out whenever thereis clear proof of dumping, but with Chinese components makersreceiving a lot of indirect aid and working in a non-transparentmanner, it is very difficult to prove any allegations of dumping."
What's next?
Chinese companies are exploring options to increase theirpresence in India through alliances with Indian companies andestablishing manufacturing bases locally. Look out for more Chinesegear under your car hood.
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