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Imports of Chinese auto parts set to rise as government pushes for electric cars

Source Name: 
Economic Times
Source Url: 
https://economictimes.indiatimes.com/news/economy/foreign-trade/imports-of-chinese-auto-parts-set-to-rise-as-government-pushes-for-electric-cars/articleshow/68418422.cms

India, the world’s third-largest automobile market, will rely more on China for components as the government pushes for electric vehicles. In the financial year 2018 alone, Chinese exports to India touched $4.3 billion — up 27 per cent over FY13 — with the automobile industry executives saying that there’s no sign of slowing down in the future. India imports 10 times more auto components from China than it exports. The ever growing import of auto components from China pose a threat to local auto components manufacturing ecosystem and will increase India’s already huge trade deficit with China in the coming years. Chinese exports to India is driven mainly by the electronic components in vehicles, which will be used for the impending launch of a slew of new electric vehicles (EVs). 
Also, the practically non-existent hardware manufacturing base in India is forcing OEMs and Tier-I suppliers to import more from China. 

Drive transmission, steering followed by electricals, interiors and engine components from China form a major chunk of the imports. 

Given India’s road map for electrification and China’s leadership in EVs (60 per cent of global volumes) and battery technology, we expect Chinese imports of EV components and sub-components to go up. 

This despite localisation targets and import duties, Chinese components for EVs will still be more competitive than making them in India. “Even today, share of certain components like imports of DC motors from China is very high,” said Aswin Kumar, programme manager, mobility (automotive and transportation), Frost & Sullivan. 

Author: Sustainability Outlook Desk