Govt to take serious action against if auto firms stop component suppliers from manufacturing locally: Piyush Goyal

“In case any auto company is pressurising any auto component manufacturer to import the components instead of localising them, when they have the technologies by which they can localise, I would urge you to please come straight to me and talk without hesitation,” commerce & industry minister Piyush Goyal said at the annual conclave of the Automotive Component Manufacturers Association (ACMA). The government will be taking a “serious note” of any such efforts to force imports from preferred suppliers, he added.

If such imports occur at prices which may not necessarily be competitive, the government will examine the matter. “I’d be happy to take cudgels on your behalf,” the minister said.

Goyal said it was brought to his attention that some auto ancillaries, who have joint ventures with foreign companies, were facing pressure from their partners. “This is a matter that the government will take and view very seriously and if at all any joint venture partner is unhappy, he’s free to leave. I’m sure our Indian companies will be in a position to give them a fair and honourable exit,” he said.

The minister also said if Indian companies were being forced to agree to unfair terms, the government would take up the matter with its foreign counterparts. The government recently took reciprocal action against Indonesia over a specific auto part in the downstream industry, he said.

“And I can assure you, the government will fully support and back fair play and fair business dealings between Indian companies and foreign companies because India has never discriminated … we’ve allowed them the equal access to the large Indian market. And, in that spirit, I think it’s only fair that our companies also get a fair deal and equal opportunity when it comes to doing, growing and expanding our business or in the event of a dispute when it comes to owning our own business,” said Goyal.

The Indian government recently announced Rs 44,038 crore production-linked incentive (PLI) schemes for advanced chemistry cell batteries, auto and auto components makers to aid manufacturers in developing India into an attractive alternative source of high-end auto components.

Companies across the world are looking to rejig their supply chain post pandemic. “They are looking at trusted partners, they want to see a resilient supply chain. The US, Japan, South Korea, Australia, companies across sectors, investors, startups, they are all looking at the great India opportunity. I don’t think there is any comparable opportunity of size and scale … (elsewhere) in the world,” said Goyal.

Given the opportunity, the auto component industry — which registered record exports worth $19 billion in the last financial year — should aim at growing it five-fold to $100 billion by 2030, said the minister.

India has a potential to grow by 8% in a business-as-usual case and, with a “little bit more effort”, even 9-10% should not be very difficult, Goyal said. “At 10% growth, you are looking at a $45 trillion economy in the next 30 years. Even at 8%, the Indian economy will be at $30-33 trillion in the next 30 years, which is going to be much larger than most other parts of the world,” he said.

Goyal said ACMA’s annual conclave was one of the most vibrant and engaging events he had attended post Covid. The minister said he had been in close contact with the automotive industry in conversations related to free-trade agreements, PLI or any other issues faced by the industry.

“I think, the worst is over, I am told the semiconductor story is largely getting sorted out, auto industry sales over the last few months have been sorted, it seems to reflect that the industry is getting its mojo back. Almost 4 million passenger vehicles are estimated to be sold, CV is largely back on track, I hope this will be now an inflection point, which will take the industry to greater heights,” Goyal said.