Share Of Chinese Auto-parts In Indian Mkt To Reach $6.85 Bn'

The share of auto parts imported from China in the domestic market is expected to increase by 12-fold and would reach to USD 6.85 billion 
(over Rs 30,000 crore) by 2012-13, industry chamber Ficci said in a report.
 
In 2008-09, China's share in the domestic auto component market stood at USD 544.6 million (about Rs 2,500 crore).
 
"Import of auto parts from China have been rising at an alarming rate of 88 per cent annually...with this growth rate, Chinese share in our domestic auto parts market would increase from 2.7 per cent to 15.6 per cent by 2012-13," it said.
 
The total import of auto parts have increased to Rs 27,355 crore in 2008-09 from Rs 9,604 crore in 2004-05.
 
The report said that if the current rate of growth in the import continues, the share of the imported products in the domestic market will increase to 42 per cent by 2013-14.
 
Currently, the share of imported auto parts across the globe in the local market is about 33 per cent.
 
It said that the share of the imports would increase further on account of reduction of customs duty on several auto parts under free trade pacts with the ASEAN and South Korea.
 
In order to ensure orderly development of domestic auto- component industry in view of the growing challenges from various free trade pacts, Ficci asked the government to give fiscal incentives to promote production of critical and high value added components.
 
It also sought creation funds - Automotive Development Fund (ADF) and Industrial Adjustment Fund (IAF)- on the lines of similar funds given in Malaysia.
The incentives could be in the several forms such as interest free loans, upgrading of machinery, component development costs and technology 
enhancement.
 
"While the share of China in our auto-component imports increased 4.5 times from 2 per cent in 2004-05 to 9 per cent in 2008-09," it said.
 
Indian auto parts industry reached a size of Rs 76,320 crore in 2008-09 from a size of Rs 38,500 crore in 2004-05.
 
India has implemented its free trade pacts with the ASEAN and South Korea from January.
 
Custom duty on auto parts like pistons, rings, bumpers, gear boxes, radiators would be zero by 2013 under the India-ASEAN FTA. While the duties on motorcycle and engine parts, piston would come down to 5 per cent level or zero under India-South Korea FTA. The country is also negotiating market opening pacts with the European Union and Japan.
 
"In view of custom duty reduction/elimination on several auto components under India-ASEAN and India-South Korea FTA, and forthcoming India-EU and India-Japan FTA the share of imports in domestic auto component market is likely to be 50 per cent by 2013-14," Ficci's study said.
 
It said that this could affect our plans to achieve the targeted size of USD 40-45 billion of auto component industry by 2016 under the Automotive Mission Plan announced in 2006.
 
India continues to be a net importer of auto components. India's trade deficit in auto components has ballooned from USD 371 million in 2004-05 to USD 2.8 billion in 2008-09. India imports auto-component mainly from the EU, US, Japan, South Korea and China.