A government request asking automakers to share data about the source and cost of their components imported from China has met with resistance as companies fear that the sensitive information may fall into the wrong hands, three people directly aware of the development said.
The government, through its investment promotion division, Invest India, asked automakers earlier this month to provide details of spare parts imported for each product and their cost.
The details were sought as part of the Centre’s efforts to curb imports of parts from China, especially after the recent border stand-off. India has slapped curbs on Chinese imports, in a move that is widely seen as aimed at imposing an economic cost on China for its aggression along its de-facto border. India also wants to cut its dependence on Chinese imports and firewall its strategic sectors from Chinese presence.
Most vehicle makers have declined to share such details, one of the three people said on condition of anonymity.
“The government has asked details of every product with procuring cost as well, and most automakers across will not be able to share it since it is at the heart of their operations. In consumer-related businesses, pricing and procurement strategy is key to profitability. Such details, if accessed by competitors, could prove to be detrimental to profitability," the person said.
Automakers import a wide range of parts, including engines, electronic parts, alloy wheels and semiconductor parts from China. Lithium-ion cells, battery packs and motors for electric vehicles are also mostly imported from China.
Since the covid-19 outbreak, India has been planning to attract companies to invest in the country as an alternative to China. Deteriorating bilateral relations with China has further expedited efforts to boost local manufacturing.
For automakers, their arrangements with parts suppliers are considered sacrosanct as it has a bearing on their profitability, said the first person cited above.
Most importantly, some parts are made only for a specific product and their price determines the price of the finished product. Hence, most automakers are unwilling to share such details as they think it could harm the viability of their respective businesses if the information is leaked.
Carmakers attribute the increase in imports of Chinese parts to the hurried transition to Bharat Stage-VI emission norms, which didn’t provide them the time to build local production.
Emailed queries sent to Invest India and the Society of Indian Automobile Manufacturers (Siam) on Friday remained unanswered.
The second person cited above said firms such as Hyundai, Renault, Nissan and Mercedes follow their global supply chains and if they share the data, then globally their operations can suffer in case of a leak, and their research and development can also be threatened.
“The government must understand that most vehicle makers won’t be able to give such data and this has nothing to do with improving local manufacturing. They already know the components that are being imported and can plan accordingly with stakeholders in the particular sector to increase local manufacturing," said the person seeking anonymity.
According to Avik Chattopadhyay, founder of brand consultancy firm Expereal, the Centre cannot ask for such data as there are components that are made only for a particular firm and, as a consequence, there are strict confidentiality clauses in the contracts.
“The intent behind the government is to understand the scale of imports from China but who will ensure this data remains safe and will not be leaked. Also, these are contracts with firms from different countries and governments there may object," he said.
Source:- Livemint.com
