India’s auto industry not ready to quit China habit

NEW DELHI — Days after a border conflict with China this month during which 20 Indian troopers have been killed, New Delhi instructed firms to seek out methods to chop imports from China. However two massive industries, cars and prescription drugs, say it’s simpler mentioned than achieved.

Like many international locations, India depends on China for merchandise corresponding to digital parts and drug elements as a result of it can’t make them or supply them elsewhere as cheaply, firm and trade figures say.

Thus any strikes to curb imports or make them costlier with out growing options will harm native companies.

“We do not import as a result of we prefer to, however as a result of we have now no selection,” mentioned R.C. Bhargava, chairman of Maruti Suzuki India, the nation’s largest automaker.

“To draw firms to provide domestically, we should be extra aggressive and decrease our prices in contrast with different international locations.”

India imported round $70.three billion of products from China within the fiscal 12 months to March 2019, and exported simply $16.7 billion — its widest commerce deficit with any nation.

The federal government is now consulting with firms on tightening curbs on 1,173 non-essential merchandise, a commerce physique official mentioned on situation of anonymity. They embrace toys, plastics, metal gadgets, electronics and particular auto parts — which feed automobile manufacturing.

That is on prime of plans to lift commerce obstacles and import duties on round 300 merchandise from China and elsewhere, as a part of Prime Minister Narendra Modi’s self-reliance marketing campaign.

In April, India additionally tightened guidelines for investments from neighboring international locations, together with China, to stop opportunistic takeovers after the pandemic.

“If issues do escalate, then India stands to lose much more than China,” mentioned the chief of company technique at certainly one of India’s prime 10 drugmakers. “We can’t afford this.”

“No knee-jerk response”

Over 1 / 4 of India’s auto half imports — $4.2 billion — got here from China in 2019, together with engine and transmission components, in line with knowledge from the Auto Element Producers’ Affiliation of India.

A few of these parts are vital and arduous to supply elsewhere instantly, mentioned Vinnie Mehta, director common at ACMA, whose members embrace firms corresponding to Bosch, Valeo and Minda Industries.

“We can’t have a knee-jerk response, particularly once we are rising from the disruption brought on by the pandemic,” he mentioned.


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