Goyal warns auto firms against nominal localisation, govt tracking data

Commerce minister says government will use company-wise import-export data and IEC numbers to assess genuine localisation and map automotive supply ecosystems

Union Commerce and Industry Minister Piyush Goyal on Thursday warned automobile companies against claiming indigenisation by routing imported goods through another Indian entity and carrying out only nominal value addition, speaking at the 66th Society of Indian Automobile Manufacturers (SIAM) annual convention.

 

“There are companies who tell us we are indigenising,” Goyal said, pointing to instances where companies set up another entity in India, import goods and carry out “a nominal 10-15 per cent value add,” after which the entire product is counted as indigenised.

 

Goyal said such practices cannot be considered sustainable economics in the long run and stressed the need for genuine localisation of the automotive supply chain.

 

The government, he said, is monitoring company-wise import and export data to assess the actual level of indigenisation. It plans to use import-export statistics along with companies’ IEC (Import Export Code) numbers to map their supply ecosystems and identify the extent of local value addition.

 

“So you may come and tell me that I have indigenised, or I am now highly localised, but I only need to connect the dots,” Goyal said.

 

He said the government could examine a company’s supply ecosystem and go “two levels down” to determine its actual level of indigenisation. “And I know exactly the level of indigenisation,” he said.

 

Goyal also said companies that are unable to indigenise certain products should make up for the gap by expanding exports. “In certain areas or components, if you are not able to indigenise, make up for it with exports,” he said.

 

He also urged the industry to “deepen your localisation” and compete with the best in the world.

 

Goyal also warned that companies could no longer remain focused only on the domestic market as India opens up to greater global competition. “Gone are the days when we could only look at the domestic market,” he said.

 

The minister said the government would encourage more global car companies to come to India and use the country not only to serve its large domestic market but also as a base for global production and exports.