Auto parts makers face China threat; price gap at 35%
The Indian auto components industry may be set to make its mark in the world market, but on home ground, it is facing a threat from neighbouring China.
According to the latest figures released by the Directorate-General of Commerce Intelligence and Statistics, import of Chinese components has increased to Rs 760.3 crore between April 2006 and January 2007, from Rs 578 crore in the full year 2005 - 06. In the same period, India's exports to China have dropped to Rs 39.3 crore from Rs 157.4 crore last year, recording a 75 per cent dip. The Auto Component Manufacturers Association projections show that imports from China for the entire 2006-07 could be as much as Rs 912.4 crore, against India's likely exports of Rs 59 crore.
According to the ACMA, Chinese components like steering gears, and wheel rims for heavy and light commercial vehicles, are giving competition to Indian vendors with an estimated price difference at 30 to 35 per cent, making them even cheaper than raw material costs.
With exports to China being denominated in dollars, rupee appreciation has eroded India's export competitiveness in the Chinese market. Further, China's mandatory local content policy compels vehicle manufacturers to source from the domestic market, making exports challenging.
According to vendor sources, Tata Motors has been a major importer of Chinese components and Ashok Leyland has followed suit in the last few months. The overall impact of these imports is a 20 to 30 percent decline in domestic sales against targets, according to industry estimates.
Source: Hindu Business Line
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