Moneycontrol
Last Updated : Jun 26, 2020 08:45 AM IST | Source: Moneycontrol.com

Amid India-China tension, auto parts from China, Hong Kong stuck at ports

Lack of clarity and no official order has led to piling up of consignments at various ports

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Auto components procured from China are very likely to face unaccounted delays after cargoes landing up on India’s sea ports are being subjected to unusual and extended scrutiny.

Several auto component and vehicle manufacturing companies have complained of ‘very high’ congestion at the Mumbai port after their shipments that sailed from China got stuck.

“Consignments coming from China and Hong Kong have been held up and not being cleared. There is no clarity on why this is being done. We are told that they are waiting for some kind of notification to come from the central government,” said an industry source on condition of anonymity.

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While majority of the vehicle manufacturing companies do not directly import components (given their high degree of localisation) their parts manufacturing partners are engaged in importing components. These parts sometimes have to be modified to suit requirements of the vehicle makers.

“There is confusion because nothing is done officially. That is the way may be to tell us to start buying locally,” said an auto parts importer whose shipment is stuck at the Mumbai port.

Global logistics provider DHL has temporarily suspended cargo pick-ups from China, Hong Kong and Macao and has sent intimations to its clients accordingly.

“Over the last few days we are witnessing a severe lag in customs clearance for shipments originating from China, Hong Kong and Macao across all the Indian ports,” a DHL letter to its clients stated.

Earlier the Maharashtra government put on hold three memorandums of understanding (MoU) it signed with ‘Chinese’ companies following the violent standoff between India and China at the Galwan valley on June 15.

India is a large importer of components from China. In 2018-19 imports from China made up 27 percent or $4.75 billion out of the total $17.6 billion imports done by India, according to the Automotive Component Manufacturers Association (ACMA), the apex body of auto parts manufacturers.

India imports drive transmission parts, electronic and electrical items, cooling systems, suspension, braking and steering parts from China. However China’s share in the overall Indian automotive industry of $120 billion is just 4 percent.

India heavily depends on China for batteries and battery cells used for building electric vehicles. Presently no company in India makes such components locally while China has a near monopoly in battery cell production in the world.

Companies like Bajaj Auto, Mahindra & Mahindra, TVS Motor Company, Hero Electric and several others who build electric two and three wheeler vehicles either directly import batteries or cells from China or their parts vendors do it for them.
First Published on Jun 26, 2020 08:45 am
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