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The Rise of 'Deep Localization'

NEW DELHI: The USD 57 billion-Indian auto component industry has started taking steps towards "deep localisation" to de-risk business from Chinese imports with the border dispute between the two countries only acting as a catalyst to speed up the process, according to industry body ACMA.


Further, the domestic automobile industry is also seeking to cut dependence on Chinese imports after facing severe shortage of critical components due to the coronavirus pandemic, as companies based out of China currently continue to be the leading suppliers of automotive components.


In 2018-19 India imported auto components worth USD 17.6 billion, of which 27 per cent - USD 4.75 billion - were from China.


"With COVID-19 and associated lockdowns, all economies and industries have started to look inwards and minimise their reliance on imports,” Automotive Component Manufacturers Association of India (ACMA) Director General Vinnie Mehta told PTI.

The auto industry in India has started to de-risk itself and is working on deep-localisation, he said, adding that the recent standoff between India and China will only hasten the process.


There is no denying that the industry needs to be 'Aatmanirbhar' and companies and the government should together define a roadmap and deliver accordingly, he stated.

"This cannot be done singularly by either the industry or the government, both will have to work in tandem," Mehta said.


Ease of doing business, availability of capital at lower rates and globally competitive logistics and energy costs are some of the prerequisites that the government should look into to ensure growth of the domestic auto component industry, he added.

He, however, stressed on avoiding any knee-jerk reactions in the current situation.

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