Indian auto firms prefer Chinese components
21 May 2007
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.