You are here: Home » Reuters » News
Business Standard

Exclusive: Modi's 'Make in India' a casualty as steel, auto firms spar over sourcing

Reuters  |  NEW DELHI 

By Neha and Shah

NEW DELHI (Reuters) - India's ministry is putting pressure on automakers to use locally made by refusing to back down on tougher import rules despite warnings that the new regulations could disrupt the production of cars, government and industry sources said.

The ministry in August announced stringent import rules for some high-that are sourced by carmakers from countries such as and but not yet manufactured in

India's auto industry, which includes companies such as Suzuki, Hyundai Motor Co, and Ford Motor Co, is staring at production stoppages if new tougher rules on are not relaxed, a warned in a letter.

"The shipments of the auto component industry have started getting impacted which possess significant risk of production stoppage of the whole automobile industry in the immediate future," Anant Geete, heavy industries minister, said in the Jan. 4 letter to steel minister,

"There is also a risk that if the import of steel (raw material) is restricted, then the industry may go for import of the components itself which may affect the government initiative of 'Make in India'," Geete said.

The new rules are expected to come into effect on Feb. 17.

The letter and the internal discussions at the have not been previously reported. has reviewed a copy of the letter.

Despite the warning from the auto industry, the steel ministry is unlikely to back down, three sources with direct knowledge of the matter told

This week the ministry called the country's biggest such as and Tata Steel, Steel Authority of Ltd (SAIL) for a meeting with carmakers including Maruti, Hyundai, Honda and Ford.

In the meeting, which was held two days after Geete's letter to Chaudhury, the officials continued to push carmakers to work with steel companies to manufacture locally and even form joint ventures, if needed, five sources with direct knowledge of the matter told

"We have told the auto companies that we need to step up and they need to sit with the companies here to let them know the specifications because our companies are well-equipped," a with direct knowledge of the discussions said.

A for the ministry said talks were ongoing with foreign companies to make value-added steel in


The steel ministry's push is the latest from which is desperate to check imports and show the success of its manufacturing programme, aimed at building a domestic industrial base and boosting jobs and growth.

India remained a net importer of steel during April-November after exports dropped over 30 percent.

The auto industry will, however, face disruption if the import of some of these comes to a standstill, Vinnie Mehta, at the Automotive Component Manufacturers Association of India, told Reuters.

The steel ministry has already granted a two-month exemption to carmakers on new quality control rules for imports which were originally due to come into effect on Dec. 18. Auto companies want an extension until the end of 2019.

Carmakers continue to rely on imports because they say companies are unable to match the quality, consistency and price, three company sources said.

An Asian carmaker which failed to locally has instead decided to import the entire fuel exhaust system, said Sugato Sen, deputy at the Society of Indian Automobile Manufacturers, a trade body.

There are fears that other carmakers will do the same, which will hurt and jobs, he said.

"Some suppliers are reluctant to go through the trouble, while others who are doing it have found there to be delays in getting clearances," Sen said.

JSW Steel, Tata Steel, SAIL, Maruti, Hyundai, Honda and Ford did not reply to a Reuters email seeking comment.

(Editing by Sanjeev Miglani; editing by David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 10 2019. 21:31 IST