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Priyanka Vyas

New Delhi, July 20 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 President, Mr Vishnu Mathur, 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, he added

ACMA, in fact, is flummoxed by the difference in pricing between components from the two countries. In a study jointly with McKinsey, it has attributed 20 per cent of the differential to China’s cost advantage, but has not been able to identify the remaining 10 to 15 per cent gap in pricing.

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 per cent decline in domestic sales against targets, according to industry estimates.

More Stories on : Automobile Components | Exports & Imports

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