China is aggressively seeking a bigger play in the auto parts space in India.
The intent will be on full display at the Auto Expo being held in the first week of January in New Delhi.
Of the total space of 38,000 square metre allotted to auto component makers at the expo, 5,000 square metre has been booked by Chinese companies.
That’s three times what they occupied at the previous expo and two-and-a-half times the next biggest foreign entry: German firms, who have booked 2000 square metre.
Indian exhibitors loom large, though, having taken up 30,000 square metre.
Vishnu Mathur, executive director, Auto Components Manufacturers Association of India (ACMA), said this is the clearest message yet that China is now looking at seriously play in India and has its strategy for the country marked out.
Jayant Davar, vice-president, ACMA adds: “Indian auto component makers do have apprehensions as the Chinese industry is a volume-oriented one, and some chunk of that will be re-directed to India.”
India imported Rs2,000 crore of components from China in 2008, while domestic players exported parts worth Rs100 crore.
However, Mathur added, “Ours being an open market we cannot restrict the Chinese from doing business here, but if we notice a case of dumping we would request the government to implement the anti-dumping duties.”
But has to be contended with is the cost advantage. “They have a cost advantage of around 35% in certain key components,” Mathur said, because of tax concessions, low raw material and labour cost in the Middle Kingdom.
Pawan Goenka, president, Society of Indian Automotive Manufacturers, said while that holds true, India has to its advantage, quality and timely delivery. “This will help Indian companies take the Chinese on,” Goenka said. India largely imports from China components like tyres, steel wheels, aluminium wheels for two wheelers, steering, gears, crank shafts and glass.
China’s total component market size is around $120 billion, of which around $25 billion is exports and the rest is for domestic consumption.
According to analyst, who did not wish to be named, in the last few years China has been growing at 20% CAGR, which would mean that by 2010, $25 billion worth of exports might actually touch $30 billion, of which approximately 5% — or about $1.5 billion by 2011 — would reach India.
India’s auto component production in April-November this year was $19.1 billion and exports $3.8 billion.
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