REDUCE DEPENDENCE ON CHINA IMPORTS FOR EV PARTS: KANT

The government has told the automotive industry to reduce its dependence on china imports for electric vehicle (EV) components and build locally as the country seeks to reshape its supply chains and looks to play a strategic role in the global value chain. NITI Aayog CEO Amitabh Kant nudged the established automakers to move forward with their EV plans, warning that if they don’t, the incumbents will cede ground to start-ups as the smaller firms are growing exponentially. “The domestic manufacturers must realise that we are in the midst of a biggest transition. EVS will become inevitable whether you like it or not,” he said during a virtual address to auto industry leaders.

China’s Ningbo port, being shut for two weeks, is having a mixed impact on trade in India, because the shutdown is hurting the local electronics market at one end, while the container shortage issue in the domestic market is getting addressed, albeit for a short period.

“Some empty container vessels from China had to be diverted to India upon port closure, and this has improved (empty) container supply for the domestic market. Though this supply ease would last only another three weeks, we (industry) are expecting at least 10 per cent of the shortage to be addressed in this span,” Arun Garodia, vice-chairman of the Engineering Export Promotion Council (India), told Business Standard.

India has been facing an acute shortage of containers since November 2020, leading to ocean freight rates zooming five-seven times within eightnine months. “Though the availability of empty containers is improving for India, there is no respite from high ocean freight for the industry,” Garodia added.

Ningbo port was forced to close its Meishan container terminal two weeks ago after a worker tested positive for Covid-19. The terminal reopened on August 25.

Alongside, the closure has begun to take a toll on the local electronics market, said industry officials.

Currently, all key components like chipset, compressors for ACS and refrigerators, and television panels (LED & LCD) are being imported from China. They account for at least 70 per cent of the local demand.

According to industry executives, hardly any containers are coming from China and there is a severe shortage of these components in India.

This has led to many leading brands cutting down on their festive season plans. Usually, they stock up for higher demand during the festive weeks by ramping up production during July, August, and September.

“The shortage of components like chipset and panels is hurting. The issue is unlikely to be resolved anytime soon and this is likely to lead to shortage of TVS during the festive season. Moreover, as the Indian Premier League and the ICC T20 World Cup are scheduled in the festive months, we will most definitely witness a shortage of TV sets in the market this year,” said Avneet Singh Marwah, chief executive officer, Superplastronics, manufacturer and brand licensee of Kodak & Thomson smart TVS.

Apart from shortages, prices of several items are set to rise just ahead of the festive weeks.

According to B Thiagarajan, managing director at Blue Star, air-conditioner makers are left with no option but to go for another round of price hikes of 7-11 per cent — before the peak festive season.

Prices of appliances like ACS, refrigerators and electronics items like TV, notebooks, and smartphones have gone up twice already since mid-2020.

Alongside, pharma players have not seen any inpact of the Chinese port crisis as of now, but industry says that if the situation persists, there would be some impact over the next ten days Chirag Doshi, former chairman of the Indian Drugs Manufacturers Association (IDMA) Gujarat state board, said that right now some Indian API makers may have faced a supply crunch of intermediates that come as raw material to make bulk drugs here. He adds that formulation makers have not yet faced any supply crunch, but the situation will become clear over the next ten days. Amid the ongoing trade issues, Jawaharlal Nehru Port Trust (JNPT), the country’s largest container port terminal, remains unperturbed despite a likely congestion in coming weeks now that the China port terminal has reopened and imports from China to India would flow in.

“We are observing the traffic daily and do not see any panic conditions even if imports from China flood our terminals. There is enough capacity and our terminals are waiting for cargo. We will not face any congestion since our yard occupancy is only 25-30 per cent normally and hence there is ample scope to keep cargo even if vessels from China flood our terminals,” said Niteen Borwankar, chief manager (traffic) at JNPT.

Of the port’s total cargo handled annually, about 12.5 per cent comes from China.