Govt Warns OEMs Against Inflated Localisation Claims, Seeks Deeper Localisation

Minister of Commerce and Industry Piyush Goyal on Wednesday warned automakers against presenting limited domestic value addition as full indigenisation and said he could assess company-wise export-import data to understand the actual level of localisation.

According to him, some companies were creating an impression of higher localisation despite continuing to rely heavily on imports.

“There are companies who tell us we are indigenizing. We are indigenizing by putting up another company in India which imports the goods, does a nominal bet, 15% value add, sells to us, and lo and behold the entire 100% is counted as indigenization,” Goyal said, while speaking at the SIAM Annual Convention in New Delhi. 

“And they expect us to buy that. And they expect us to believe that this is sustainable economics in the long run.” 

The minister said the government was keeping track of companies' actual levels of indigenisation and could use data to assess their supply chains and import dependence.

"The world's companies today are looking up to all of you. There are of course, a few black sheep also, I will not name anybody, who need to really look up their Indigenization program of rest," Goyal said.

"You may not realize it. But I am watching surely. The level of indigenization...I am looking at the company-wise figure of import(s), company-wise figure of export(s). So you may come and tell me that I have indigenized or I am now highly localized."

Goyal said companies that are unable to increase localisation in certain areas should offset it by expanding exports. "In certain things, if you are not able to integrate, make up for it with exports. Expand your exports.”

Complementing Maruti Suzuki India for leading passenger vehicle exports, Goyal said, "The only statistic that I can recognise and appreciate is the brilliant cars that you [industry] exported last year. Maruti Suzuki is today exporting probably half of those million units that have been exported."

He also called on the industry to identify components that continued to be imported and explore domestic production and technology partnerships.

“Look up all the components we get, continue to import,” Goyal said, urging companies to assess whether Indian firms could manufacture them competitively in terms of quality and price. "Wherever required, get technology collaboration, get partnerships,” he added.