BS reported that cheap imports from China threaten to punch a huge hole in the business of local automobile component makers as Indian owned car and 2 wheeler manufacturers have plans to import in a big way from China and have set up full fledged purchase offices there.
As per the report, auto component imports from China have grown rapidly in the last 2 years. From less than 1.5 % of all component imports in 2003 or 2004, China now accounts for close to 10%. A quarter of the growth in component imports has been contributed by China in the last 3 years. India's exports to China have stagnated at around INR 100 crore to 150 crore in the last 5 years.
Dr Pawan Goenka president of Mahindra & Mahindra said that "In some cases, the landed cost of Chinese components is cheaper than the raw material cost of the same component in India."
Component manufacturers said that on an average parts can be bought 30% cheaper in China. Such imports have created new price benchmarks and robbed them of all powers to raise prices on account of higher input costs. And this, they say, has hurt the industry real bad.
The import and export of Auto components is as under
| Period | Import | Total | Export |
| 2003-04 | 91 | 6,499 | 107 |
| 2004-05 | 140 | 8,560 | 88 |
| 2005-06 | 766 | 10,922 | 158 |
| 2006-07 | 1,295 | 14,644 | 104 |
| 2007-08 | 1,716 | 18,092 | 159 |
Mr Sanjay Labroo CEO & MD of Asahi India said that "The cost of making glass has gone up by 50% in the last couple of years, but our prices have up only by 10%."
Mr Shriram Pistons & Ashok Taneja Rings President said that "The industry is squeezed between large steel makers and automobile makers." The company has been able to recover only 3 quarters of the rise in its input costs from its customers in the last 1 year.
Mr Surinder Kapur Chairman of Sona Group said that "One of them told me it will be 20%." M&M has decided that in no product category will Chinese imports exceed 50% of requirement. But this isn't enough to calm the frayed nerves of the Indian component industry.
The Automotive Component Manufacturers' Association had some weeks back taken a team to China to study how components were made so cheap there. A member of the team said that "We could understand only half of the price difference. The other half we could not figure out."