India: With imports stuck at ports, automakers stare at further disruption in production

  • 02-Jul-2020
  • India: With imports stuck at ports, automakers stare at further disruption in production

MG Motor India Pvt. Ltd and Tata Motors Ltd are among automakers in the country dealing with the fallout of a deadly border clash between Indian and Chinese soldiers earlier this month. With physical inspection of Chinese components threatening to upset the just-in-time model of production, the auto industry has also begun to approach the government for help.

The customs department has started manual inspections of components imported from China at Indian ports, leading to critical delays for an industry that is heavily dependent on timely deliveries, said three people aware of the developments.

Car makers usually have up to two months of inventory of imported parts. However, the stringent lockdown in April and May meant most of them could not import adequately.

Authorities have imposed strict checking of Chinese consignments following the Ladakh border clash that left 20 Indian soldiers dead.

Automakers import engine and electronic parts such as fuel injection systems, catalytic converters, alloy wheels and other semiconductor parts from China. Lithium-ion cells, battery packs and electric motors for electric vehicles (EVs) are also mostly imported from China.

A prolonged delay will hamper plans of most companies to ramp up production after they reopened plants in May, the people cited above said, seeking anonymity.

For instance, MG Motor, a unit of China’s SAIC Motor Corp., has consignments of spare parts stuck at ports in Chennai and Visakhapatnam, said the first person cited above. This will hit MG’s production schedule if the crisis is not resolved in time, the person said.

“MG Motor is one of the many companies that are concerned about the potential impact of the current scenario at ports. In the last couple of months, most vehicle manufacturers couldn’t import adequate parts. Subdued demand in the domestic market though will provide some comfort to automakers,” the person said.

Tata Motors is facing issues with EV spare parts, said the second person mentioned above.

“The production of EVs at Tata Motors might face some disruption due to the impasse and the same is expected with the internal combustion engine vehicles as well,” the person said.

“Auto is better-placed compared to pharma or electronics, but the impact here will be felt with a lag,” the person said.

The imbroglio at ports could also impact production at Mahindra and Mahindra, Bajaj Auto, Hero MotoCorp, TVS Motor Co. and Hyundai Motor India Ltd that import parts from China.

“…some of our suppliers have significant exposure to China and the impact of immediate restriction on import of parts from that country is being assessed,” said a Hero MotoCorp spokesperson.

Spokespersons at Tata Motors and TVS Motor declined to respond to queries emailed on Sunday. Queries to MG Motor India, Hyundai Motor India and M&M remained unanswered.

“Inordinate delays in clearance due to congestions at port could impact manufacturing of vehicles . The industry is piecing itself together as growth is limping back; any further disruption now is best avoided,” Rajan Wadhera, president, Society of Indian Automobile Manufacturers, said in a note on Monday.



Source:- Hellenicshippingnews.com

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