THE LONG ROAD TO SELF-RELIANCE

India cannot end its reliance on China for automotive components overnight. An import ban would only choke supplies, raising costs for manufacturers and consumers. Needed: a long-term strategy to build domestic capacities

- M.G. ARUN

Long before geopolitical tensions led to calls to ban Chinese goods, Indian automotive component makers had already decided to reduce their dependence on Chinese suppliers. Called ‘China Plus One’, their strategy aims at creating alternative supply lines—from Japan, Korea, Taiwan, Thailand and Germany, among others— for a range of auto parts imported by India. This had followed disruptions in component supplies from China in January and February, as COVID-19 devastated Wuhan, a major auto hub in that country and the global epicentre of the disease.

COVID-19 has imperiled the movement of some $4.5 billion (Rs 33,750 crore) worth of auto components that India annually imports from China, comprising about 26 per cent of India’s $17 billion (Rs 1.28 lakh crore) worth of auto parts imports from around the globe. Even so, the Indian market is only a small part of China’s exports in this sector. China exports $70 billion worth of auto parts globally, as per a May 2019 Bloomberg report. Exports to India, at $4.5 billion, are just 6 per cent of that total.