Gadkari urges auto component manufacturers to increase localisation

"The government has always had a clear policy that we want to encourage Make in India and Made in India," he said.

New Delhi: Union Minister Nitin Gadkari on Thursday asked automobile manufacturers to hike localisation of components to 100 per cent or else the government will think of increasing basic customs duty on imported items, but the auto industry wants support for localisation of electronic parts, specially semiconductors.

Speaking at an event organised by the Automotive Components Manufacturers Association of India (ACMA), Gadkari, Minister of Road Transport and Highways, said the present level of localisation of parts in the Indian auto sector is around 70 per cent and “at any cost we need to stop imports of auto components”.

“I urge both vehicle and auto component manufacturers to increase localisation of components to the maximum. Not maximum, my expectation is to make it 100 per cent. We are fully competent in all the things. Even, I am requesting automobile manufacturing companies to take it very seriously otherwise for imports of components we will think in the direction to increase more customs duty on that,” he said.

Reiterating that the auto sector is a key driver of the Indian economy and top contributor among the manufacturing sector, the minister said increase in basic customs duty on select auto components will encourage local manufacturing of such items. “The government has always had a clear policy that we want to encourage Make in India and Made in India,” he said.

SIAM seeks support

Earlier in the day, Society of Indian Automobile Manufacturers (SIAM) President Kenichi Ayukawa, while speaking at the same event, sought government support for localisation of electronic components, specially semiconductors, which are currently facing a global shortage, stating it would need huge investments. Ayukawa said SIAM and Automotive Components Manufacturers Association of India (ACMA) are working together on a road map for ‘Aaatmanirbhar’ for more localisation of components.

“Together we have identified specific areas of engine transmission, electrical tooling, grade of steel etc. that have good scope for localisation,” he said. Ayukawa further said,”For electronics areas, specially for semiconductor parts, government support is required for localisation as it needs huge investments. Auto demand alone is not enough for localisation in electronics.”

The shortage of semiconductors globally has impacted automobile manufacturers in India as well. Mahindra & Mahindra has already stated that its passenger vehicle production has been impacted by the supply constraints, while others like Tata Motors and Maruti Suzuki are also keeping a close watch on the development. Semiconductors have become a crucial part in modern cars with increased electronic components and connectivity features.

Asking the manufacturers to focus on reducing cost without compromising quality to supply components of international standards, Gadkari said,”The government is working towards making the country a global automobile manufacturing hub in the next five years and we are going to declare the whole policy.” The Minister also said with the proposed voluntary vehicles scrappage policy, the availability of raw materials such as steel, plastics, rubber, copper and aluminum among others will also increase, which the manufacturers should take advantage of.