Automakers shouldn't import components unnecessarily: Piyush Goyal

Union Minister for Commerce and Industry Piyush Goyal suggested the Indian automobile industry should stop the unnecessary import of auto components from overseas markets if the exporting country is not giving equal access to Indian companies, reported PTI. However, the minister also said that the auto companies in India can import quality components from other countries if those are not available or manufactured here.

The minister also reportedly said that the Indian government may have to look at the practices of some of the players in the automobile industry who get directed by their parent companies when it comes to sourcing and pricing of imports of components. He also reportedly stated that there are certain companies who by choice prefer to import and there are certain firms who may not by themselves be importing and on record showing a greater degree of indigenisation.

Goyal's comment comes at a time when the Indian government has been pushing the local manufacturing sector hard. The automobile industry being an apex manufacturing sector sources a large number of components from overseas markets as well as from domestic auto parts manufacturers. However, there have been allegations from the stakeholders of the ecosystem that many auto companies in India focus on solely importing the components and not giving equal access to the local parts manufacturers. "Where things are being unnecessarily imported without India getting an equal opportunity in those countries I would be tempted," Goyal said here at the annual convention of the Society of Indian Automobile Manufacturers (SIAM). However, he did not elaborate on these remarks.

Speaking further, the minister said that many automobile manufacturers in India often get dictated by their parent companies from where the component suppliers would source, the pricing at which it will be sourced. "I do not know how legal that is. But I personally think there is a question mark on transfer pricing in that, there is a question mark on fair play. I would urge all the players of the auto industry to introspect on it. I personally believe that at some point the government may also have to get into greater detail on this subject," he added.

The minister also reportedly said that the government may have to take retaliatory action against the countries that do not allow access to Indian steel companies but are permitted to send the metal to India. Goyal was referring to some auto companies importing automotive steel from their parent country rather than procuring it from India. He further added that the industry should trust the domestic ecosystem.