ACMA Director General Vinnie Mehta attributed the drop in component imports
in April-July mainly to a decline in vehicle production due to the lockdown. "However," he said, "while localisation of components will take some time, with the Government's effort and industry's initiatives, we will start showing positive results in next 12-18 months."
Mehta said the supply chain had started getting disrupted in February, eventually with shutdown production coming to a standstill in April and most of May. It is only now that the production is gradually returning to pre-Covid levels.
"While the industry, OEMs and the components manufacturers are closely working and are committed to deep localisation, it would take around 2-3 years to develop a product, test it and validate it. Besides, it is important that regulations allow sufficient time for technologies to be localised," he said.
"Government is taking all the right measures. For example, the recent order on quality control for wheel rims will help check rampant imports of the item by aftermarket traders. In the same vein, we need to mandate standards for other components sold in the aftermarket. These are low-hanging fruits for localisation. Invoking standards will also benefit the customers as they will get access to quality products ensuring vehicle safety", he said.
A recent report by EY stated that power train, automatic transmission and electronic components have contributed to over 60 per cent of the total imports by value.
Some raw materials like platinum, palladium and rhodium, used for exhaust after-treatment devices are 100 per cent imported, as they aren't available in India. Even local raw material suppliers of steel, copper, plastics, and engineering plastics have a high import content. This is primarily due to constraints such as unavailability, inadequate quality, and dependence on other industries.
With technological advancements and disruptions in the mobility ecosystem due to introduction of BS VI norms, regulatory measures on vehicle safety and the push towards e-mobility, the reliance on imports of these components has increased in the recent past. Full realisation of this will be visible in the year 2020. Therefore, the import content is expected to show an increase in the short term since the industry did not get adequate time for localization e.g. BS VI in 2020 was introduced just three-years after BS IV Emission Norms in 2017. Subsequently, with concerted on-going efforts, import is expected to come down.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.