Bike makers eye local sourcing by March
NEW DELHI/MUMBAI: Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd are preparing to locally source most of their components imported from China by March to offset any potential disruptions to their supply chains in the future, said four people directly aware of the development.
This follows the continuing border standoff between India and China that escalated in midJune with the killing of 20 Indian army personnel in Ladakh. India, in retaliation, increased inspection of consignments from China and levied import curbs on certain parts like tyres, which have affected the production of some automakers.
In some cases where localising a particular part could lead to cost escalation, the original equipment makers (OEMS) have also expressed their willingness to share or bear the entire cost with parts makers.some suppliers based in China have also been asked to shift to other countries for the time being even at the expense of an increase in cost.
According to the first of the four people cited above, the managements of Hero and Bajaj have set a target of localising most of their imported parts by endMarch. “Suppliers have been told in no uncertain terms that they should also start making plans to reduce dependence on Chinese imports by next year. They are trying to eliminate any Chinese link in the system even at the expense of an increase in cost. At this point, insulating the supplychain network is of paramount importance for these manufacturers,” said the person, requesting anonymity.
“We are asking suppliers to set up shop in other countries. You have to trade-off between cost and supply security,” Niranjan Gupta, chief financial officer of Hero Motocorp, said at a postearnings conference call with analysts, hinting at a possible move by the company to cut Chinese imports. TVS Motor is also aggressively planning to localise most of its imported parts, said the four people cited above.
Queries emailed to Hero, Bajaj Aut o a n d T VS o n F r i d a y remained unanswered until press time. Indian automakers began to take steps to reduce their dependence on Chinese imports after being forced to cut output by 10% in February as covid-related lockdowns in China disrupted supplies.