The After Effects of “Boycott China” in the Automotive Sector

First the COVID19 and then the border tension, China has forced India to boycott the products that hail from the land of the red dragon. China is known for products at better pricing and Indian manufacturers have been sourcing supplies from China from a long time now. One of the most affected industry, yet again, is the automotive industry. Let’s take a look at what all is there for the industry on the road ahead in the “Boycott China” movement.

China’s involvement in the Indian automotive industry

Indian automotive industry greatly relies on the raw material and supplies from China. For eg, India’s largest carmaker, Maruti Suzuki does not source anything from China directly, but the OEM suppliers of Maruti do. OEMs source a lot of material from China due to the competitive pricing. Bajaj, India’s largest two-wheeler maker, has stated that the company sources products like alloy wheels from China due to the competitive pricing. Now, boycotting Chinese products means increased prices of the finished products.

Indian OEMs, especially linked to EVs and two-wheelers have a minimum of 26% components sourced from China. With the “Boycott China” movement, how will this dependency be removed?

Is the “Boycott China” movement justified?

Before answering other questions, let us see whether the Boycott China movement is justified or not? The encounter at the Galvan Valley has enraged every Indian as the blood of our brave soldiers were spilt.

During world war 2, the USA dropped atomic bombs over the cities of Hiroshima and Nagasaki. Since then, Japanese people have been totally restraining themselves from using USA based products.

Same should go with Indians too. Why should we wait for the war to start and end in despair? It is high time and by boycotting Chinese products, we Indians are showcasing two things: first, we don’t need to be dependent on China and second, we stand by the Indian Government and the Soldiers standing at the border for the protection of the country.

And, on the brighter side, this will surely give a boost to the local manufacturers and business. “Local for Vocal” movement started by our Hon’ble Prime Minister Narendra Modi, showcases that India is should be ready to start cultivating the talent that lies within the country.

How are companies making do with the supply chain of the products from China?

The best way to cope up with the changing times is to completely start with the in-house research and development. In a recent development, Hero Cycles withdrew 900 crore business plan from China abiding by the ‘Boycott China’ movement. Companies like Hero Motocorp and Bajaj have been prominently increasing their R&D in-house. The best way to increase the quality of products is to invest in better technology.

For eg, Bajaj has invested in KTM and Husqvarna which will enhance the development of products from the company. TVS Motors has tied up with BMW to enhance its R&D. These types of joint ventures or takeovers have helped the companies keep the Chinese invasion deep into the companies at a bay.

Companies have started looking for local vendors for the products which were earlier sourced from China. This task surely is a hectic one! Indian manufacturers are also capable of making such products in India with support from the government.

What will the “Boycott China” movement lead to?

There are plenty of outcomes from this movement that are already visible at present. Some of them are:

• People have started keeping themselves restrained from buying Chinese products. This can be seen in the sales charts of MG, which have significantly been affected by the movement.
• Companies are facing some issues related to supplies from China. Association with China is what everyone is trying to avoid at present.
• The future investments from companies like Great Wall Motors have been halted by the government of India. No further agreements will be signed between the government and any Chinese company. Let’s discuss this point in detail.

What are the future prospects or Chinese companies in India?

As of now, all the future agreements between the Chinese companies and the Government of India stands cancelled. In a span of about 2 years, Chinese projects in the automotive sector amounting to over ₹5,000 has been suspended.

Great Wall Motors was all set to launch their line up in 2021, which they showcased at the Auto Expo 2020. Other companies also planned to come up with their products in the Indian market. But this surely puts a halt on these companies.

Talking about the companies which have already started their operation in India, it is going to be difficult for them to sustain amidst the retaliation towards the Chinese products by the Indians. Future does seem to be bleak!

Talking about Chinese automakers, MG cannot be completely boycotted as their production is being done in Halol, Gujarat. This production facility employee a lot of Indian nationals. Shutting down the company that has been operating from the past one year will be consequential for India. It will lead to the unemployment of a lot of local people and a great loss to the state government.

So what do you think about the “Boycott China” movement? Is it really feasible for the country? Will India ever be able to become 100% #AtmaNirbhar? Let us know in the comments section below about your thoughts about this movement.

Disclaimer: The views and opinions expressed in the article are those of the respective author and author only.