The government is going ahead in its push to manufacture more locally to reduce overseas dependency as well as costs incurred by carmakers in India. In his latest message to the auto industry, Union Minister Nitin Gadkari has urged auto component manufacturers to increase localisation to 100 per cent. At present, around 70 per cent of all the components required by the industry is manufactured locally.
"I urge both vehicle and auto component manufacturers to increase localisation of components to the maximum. Not maximum, my expectation is to make it 100 per cent. We are fully competent in all the things. Even, I am requesting automobile manufacturing companies to take it very seriously otherwise for imports of components we will think in the direction to increase more customs duty on that," Gadkari said.
Nitin Gadkari was speaking at an event organised by Automotive Components Manufacturers Association of India (ACMA) on Thursday.
Earlier this month, during Budget 2021 presentation, Finance Minister Nirmala Sitharaman had proposed hike in customs duty on some of the auto parts imported to India. Though the exact impact of the hike is yet to be clear, Gadkari has said that the basic customs duty on imported items will only encourage the local manufacturers.
Gadkari also said, “My request to all of you is that at any cost we need to stop imports of auto components...This is the time for the Indian auto industry to support Make in India and Made in India movement."
The auto industry contributes a substantial part to India’s GDP. Gadkari made it clear that boosting local manufacturing will not only help domestic players to flourish, but also give a bigger push to the Make in India initiative.
Gadkari said, "You may be aware that the auto component industry is considered as one of the shining sectors and considered among the champions to achieve the goal of Aatmanirbhar Bharat and Make in India. It is because of strong capability of the component sector that the vehicle industry in India has been able to achieve localisation of around 70 per cent."
He also said,"The government is working towards making the country a global automobile manufacturing hub in the next five years and we are going to declare the whole policy."
While Society of Indian Automobile Manufacturers (SIAM) agreed to the concept of pushing for more locally manufactured components, it said that to achieve something as big as 100 per cent localisation would require a lot of investments.
SIAM President Kenichi Ayukawa said, “For electronics areas, specially for semiconductor parts, government support is required for localisation as it needs huge investments. Auto demand alone is not enough for localisation in electronics."
At present, almost every automaker around the world is struggling to overcome the shortage of semiconductors, which has led to suspension of car manufacturing at some of the plants. In India, Mahindra & Mahindra is one of the key carmakers whose passenger vehicle production has taken a hit by chip shortage.