India Aims To Reduce Component Imports And Promote Exports To Become Self-Reliant

The Indian auto industry has been disrupted for a while now. First, the prolonged slowdown in auto sales took a toll on the entire industry last year and had a multiplier effect on the auto component sector leading to quite a few job losses. Then, the Coronavirus crisis hit it so severely this year that volumes are down to 2010 levels and stakeholders like the Society of Indian Automobile Manufacturers (SIAM) and automakers are expecting getting back to 2019 levels only by FY2024-25. That said, it's crisis situations like this that get us introspecting and the industry is now targeting to reduce its dependency on imports by almost half and increase exports levels in a bid to strengthen its position in the global picture.

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The auto sector is trying to increase its export in a bid to become more competitive.

The core strategy is to fill the huge rift that's there in what we import against our exports. The move will primarily give a much a needed shot in the arm to those component manufacturers who come under MSMEs and in-turn will build up the capital strength cohesively instead of spending more money on a similar exported component. It will not only make the Indian auto industry more competitive along with creating more jobs, but also will save the extra money we need to pay for exports and logistics. The Indian auto industry still has a heavy dependence on imports of components and spends almost Rs. 1 lakh crore annually, while what it exports is mere. At SIAM's 60th convention, the industry has unanimously agreed on reducing its reliance on imports and promote local manufacturing on lines of Make In India and Aatma Nirbhar Bharat (Self-Reliant India).

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The auto industry is trying to promote local manufacturing.

Dr. Pawan Goenka, Past President - SIAM and Managing Director, Mahindra & Mahindra said, Going forward, we will look at augmenting our exports, reduce imports, create more jobs and up our investments in research & development. In the automotive components space, our imports are to the tune of 1 lakh crore and we are looking at reducing the number in 4-5 years. For this to happen, we need to rethink, re-strategise, re-organise and implement steps such as reducing current logistics costs, relaxing duties and taxes, entering into FTAs and similar other trading pre-requisites with bigger automobile markets."

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Local manufacturing will also create more jobs.

Piyush Goyal, Union Minister of Commerce & Industry and Railways, Government of India, said, "We need to build Global scale plants in the auto sector that are at par with international standards. We should aim at improving the scale and quality of what we are producing and export it to the rest of the world. The key is to create a sustainable value chain." Goyal also confirmed that the government will not step back and will proactively work in this direction. "We are a listening Government and we will continue to do all that we can to help the auto-industry. We will also look at devising innovative models to boost exports. Some of these that are currently prevalent include, the credit guarantee model, creating automotive hubs and clusters, partnering with States to make land availability easier, and adopt a more competitive approach to domestic manufacturing," Goyal added.

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India exports 40 per cent of its locally manufactured auto components to Central and South America

India is currently the largest exporter to Central and South America. Almost 40 per cent of our export volumes currently are sent to these markets, followed by central and East Africa. At present, exports accounts for 16 per cent of our total output and SIAM believes that there is a lot of room for expansion.