Thailand seeks to be preferred investment destination for India Auto Inc

Thailand, an ASEAN automotive hub, is actively pushing its promise as an investment destination to Indian automotive OEMs and component suppliers.

In a bid to attract automakers and suppliers to set up a manufacturing footprint in the country to tap growing opportunities in the ASEAN region, Thailand is offering several incentives including tax holidays for manufacturing vehicles, components, R&D and testing activities besides providing ready industrial parks and necessary infrastructure with skilled labour.

To promote trade ties and investment with India, a delegation from Thailand comprising key companies and government bodies interacted with Indian companies in Chennai today at a CII-organised seminar.   

Speaking to Autocar Professional, Dr Bonggot Anuroj, executive director of investment marketing bureau, Thailand Board of Investment, said, “There is a lot of room for Indian auto component suppliers to set up a manufacturing footprint in Thailand to make it an export hub to tap the large ASEAN market. We offer quality workers, a well established business environment and infrastructure.”

In her presentations, she said, that while trade engagement between Thailand and India has been on an ascent in the past few years but trade and investment have not reached their potential. The country allows 100% ownership to foreigners in the manufacturing sector, no local content or export requirements, and no restriction on foreign currency. Plus, companies can enjoy a corporate tax holiday for up to 8 years.

The automotive industry is one of the mainstays of Thailand’s economy and contributes  12% to the country’s GDP. Globally, Thailand ranks 12th in terms of overall production and sixth in commercial vehicles.

The country has a manufacturing base for OEMs such as Auto Alliance Thailand (Ford and Mazda), BMW, General Motors, Hino Motors, Honda Automobile, Isuzu Motors, Toyota Motors, Mitsubishi Motors, Nissan, Tata Motors, Suzuki Motors, Mercedes-Benz and Volvo Cars.

Automotive parts and the component sector have been critical to the success of Thailand’s auto industry. The country has approximately 709 Tier 1 auto part suppliers and 1,700 Tier 2 and 3 suppliers. The major players in the components industry are Bosch, Denso, Continental, Magna International, Aisin Seiki, Johnson Control, Faurecia, ZF, Yazaki and Lear.

Being a production base for ASEAN, Thailand offers good opportunities for suppliers from India to explore the market. Despite the presence of many suppliers and OEMs, some auto components are still imported into Thailand. Manufacturing opportunities for suppliers include electric fuel-injection system, substrates for catalytic converter, automobile transmissions, electronic stability controls electronic air conditioning system and regenerative braking systems among others.

Largest natural rubber producer

Thailand is the world’s largest natural rubber producer and exporter with total production of 4.47 million tons last year. Of this, the country uses only 13% for domestic consumption and exports 3.7 million tons of natural rubber, which accounts for 36% of global natural rubber production. Considering Thailand's leading status as natural rubber production hub, major tyre manufacturers such as Goodyear, Bridgestone, Dunlop and Michelin have set up manufacturing facilities in the country.  

At present, India doesn't produce enough natural rubber for its domestic needs and therefore imports from countries like Thailand, Vietnam and Malaysia. Tyre companies setting up manufacturing plants in Thailand get a very high incentive as well as no levy of import duty on machinery.  

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