Geopolitical risks driving auto firms from China, says SIAM chief

SIAM President says India should seize the opportunity and invite these companies home.

Many companies in China are relocating or putting plants in other countries to cover geopolitical risks and the auto and components sector must bring those investments or tie up with them to produce in India, newly-elected President of Society of Indian Automobile Manufacturers (SIAM) Kenichi Ayukawa said on Saturday.

Speaking at the annual session of the Auto Components Manufacturers Association of India (ACMA), Mr, Ayukawa, who is also the managing director and CEO of Maruti Suzuki India, also said that he would make efforts to organise some business exploration meetings with manufacturers of Japan to push make in India.

Such similar steps could also be taken up with South Korea, U.S.A and European countries, while asking components makers to go for “maximum localisation of inner parts and raw material in line with ‘Aatmanirbhar Bharat’ or self-reliant India drive.”

“There is opportunity in adversity. Many companies in China are relocating or putting plants in other countries to cover geopolitical risk. We should bring those investments to India or tie up with them to produce in India,” Mr. Ayukawa said.

He further said: “I will make efforts to organise some business exploration meetings with manufacturers of Japan to increase Make in India. Similarly, we could do with other countries like Europe or Korea or U.S.A..”

Stating that the challenges continue, Mr. Ayukawa asked the components industry to increase production while taking care of employees’ health and safety in these challenging times.

“You must deliver the components as required by customers,” he said adding that doing so may be difficult in the middle of changing lockdowns and “it needs a good amount of top management monitoring and detailing“.

He also exhorted the components industry to take extreme care of quality and safety these days.

“Because of social distancing norms and implementing SOPs, it may be likely to miss some steps in some processes. These could lead to quality problems or safety hazards. There is no compromise on quality and safety,” Mr. Ayukawa said.

Stating that SIAM sourcing group has identified four categories of components — electronics, some grades of steel, tooling and electric vehicles components — where imports should be converted to local, he said, “We would request you (component makers) to take leadership and assume responsibility for localisation of these components.”

“If we are able to achieve this, India will become very powerful for exports also. If you can produce ventilators and PPE in two months, I am confident you can achieve auto component localisation also,” Mr. Ayukawa said.

He sought government support to bring production linked incentive schemes for exports in the auto sector, GST reduction and scrappage incentive scheme for domestic demand.

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