T. Murrali
Chennai, Dec. 5 The Japanese auto industry has begun exploring possibilities of sourcing components from India.
A two-day event, organised jointly by the Automotive Component Manufacturers Association (ACMA) and Japan External Trade Organisation (JETRO), saw the presence of 22 large potential buyers from Japan.
Pointing out that this is the first time that JETRO is conducting such an event in India, experts in the auto components industry said that the event shows a first-time interest in India by the Japanese.
India imports from Japan auto components 10 times more than what it exports. Imports from Japan (Rs 2,413 crore) grew 72 per cent in 2007-08 over the previous year. Exports to Japan, which grew 11 per cent last year, were still nothing much to write home about, at Rs 205 crore.
Japanese small car major Suzuki entered India as a joint venture in 1981. Today, it buys 97 per cent of the components domestically, but buys practically nothing for its plant in Japan. The reason could be ‘keiretsu’, a tradition under which an OE buys its requirements from a close group of associates. Keiretsu assures the associates of business and lets the OE have a control over quality and price.
So Japan has made Asean countries, especially China, Thailand and Malaysia, its manufacturing suburbs, but India is yet to break into the club.
This is despite there being 200 Japanese entities in India — joint ventures as well as wholly-owned subsidiaries. Seven of them are vehicle manufacturers.
Yet, Japan accounted for 1.4 per cent of India’s exports of auto components (Rs 14,130 crore) last year. North America accounted for 28 per cent and the EU, 38 per cent.
In contrast, Japan is buying more from other countries. Japan’s imports from China, Thailand and South Korea are growing.
Are things changing?
But now, following its decision to reduce dependence on any one country, Japanese auto industry is looking at India as a probable sourcing destination.
Japanese representatives at the expo said India is by far more stable and robust economy to work with than their Asean counterparts.
Twenty-two Japanese companies, including Denso, Hitachi, Honda Siel Cars, Mikuni India, Mitsubishi Heavy Industries, Renault Nissan Technology & Business Centre, showcased their products that they were keen to source from India. Similarly, about 30 Indian auto component manufacturers, including Amtek, Caparo, GNA, IP Rings, LGB, Rane and Hi-Tech Gears also displayed their wares.
