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Chinese auto parts imports into India surging

BS reported that the Chinese auto component makers recorded the biggest presence among all foreign automotive players in t the Delhi Auto Expo this year with over 100 of them

As per report, from about INR 30 crore in 2000 less than 1%, imports of Chinese auto parts increased to over INR 2500 crore in 2009 accounting for 10% of the total Indian auto components market.

The Automotive Component Manufacturers Association of India said that imports of components from China have registered a 97% compounded annual growth rate over the past seven years.

According to a report by research firm A T Kearney, the 12,000 odd auto parts companies in China are far more competitive than the 5,000 plus companies in India due to several factors, including lower wages, steel price, power tariffs and taxes.

According to estimates, wage rates in China are 15% to 25% lower than in India and the companies there get higher subsidy on power usage. ACMA has found that the difference between Indian and Chinese auto component companies’ factory to factory cost taking into consideration the cost of transport, octroi, Customs duty and others is a huge 45% in China’s favor. The flood started after the government lowered the import duty from 15% in 2005 to 12.5% in 2006 and 2.5% the following year.

India is already the third biggest importer of cheap Chinese tyres, which not only cater to the demand from the after market but also service the original equipment manufacturer demand. The demand recently shot up due to unavailability of adequate commercial vehicle tyres in the local market.

An executive from one of the Chinese companies said that their products are about 40% to 50% cheaper than India made products having the same quality standards.

(Source: Business Standard)