Indian auto firms prefer Chinese components

India has become the auto component hub for global auto giants but domestic auto companies prefer to engage the dragon, reports CNBC-TV18.

Most cars across the globe are put together using components with the 'made in India' brand. Auto giants like General Motors, Ford, DC source almost 70 per cent of their components from India resulting in exports worth almost Rs9,000 crore.

GM plans to increase sourcing over the next four to five years to $1 billion annually, of which India will get a lion's share. Ford Motor plans to source components worth $500 million from India, while Daimler Chrysler's component exports rose 20 per cent last fiscal.

A K Taneja, managing director, Shriram Pistons, said, "Global OEMs are looking at India even though they have a large presence in China. This is due to the design capability of Indian engineering professionals for components that require a high element of design, development validation and testing. India offers better cost advantage and there is an ease of doing business in India due to common language."

While global players are coming to India, Indian auto companies are engaging the dragon. Indian OEMs like Tata Motors, Mahindra and Mahindra, Bajaj Auto are importing components from China. In fact, component imports from China to India have seen a hike of almost 120 per cent last year.

Says Ravi Kant, managing director, Tata Motors, "To be cost competitive with global OEMs, who are coming to India, we need to go to a place that will give us cost advantage from here and that is why we are going."

VW, BMW, Man trucks, Renault, Nissan, Fiat and Iveco are others who are keenly looking to source auto components from India. Interestingly, their component sourcing from China has gone down in spite of their large presence there, largely on account of IPR infringement.