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Indian manufacturers look at China for components and markets for finished goods – India China manufacturing boom starts
Indian manufacturers are going ahead with alliances with Chine companies to for joint ventures to outsource components from China and penetrate Chinese markets for Indian finished goods.
According to media sources, Mahindra & Mahindra's Chinese joint venture Mahindra (China) Tractor Co Ltd Monday commenced its operations with the rolling out of the first tractor from its manufacturing unit.
"This strategic venture takes us one step closer to our ambition of becoming the world's number one tractor manufacturer," M&M Vice Chairman and Managing Director Anand Mahindra said in a statement here.
The lure of cheap bicycle components has been leading Indian bicycle traders to China, from where they are sourcing material for exports to countries in Africa and the Middle East.
"At least five bicycle and bicycle parts exporters have opened their offices in China and several other merchant exporters have now been contemplating on the same lines," Engineering Exporters Association of India president Rajinder Jindal said here today.
MCTCL is a joint venture between M&M's 100 per cent subsidary Mahindra Overseas Investment Co (Mauritius) Ltd (MOICML) and Jiangling Motor Co Group (JMCG).
MCTCL had acquired the tractor manufacturing plant with a production capacity of 12,000 tractors per annum from Jiangling Tractor Company, a subsidiary of JMCG.
Mahindra has a majority stake (80 per cent) in the JV entity and is investing US $8 million out of the total investment of US $10 million while the remaining share lies with JMCG.
MCTCL would cater to the Chinese domestic market with 18 to 33 HP vehicles under the Fengshou brand and 60 HP tractors under the Mahindra brand.
The plant would also export tractors to America, Europe and India to begin with, it said.
Since Chinese bicycles are 40 per cent cheaper than those manufactured in India, the traders view it as a source for inexpensive material, which could be used for export purposes, he said.
According to Jindal, the bicycle and bicycle parts exporters who have set up their offices in China are Sadem Industries, Deepak International, Eastman Industries, Unistar Exports and Deol cycles. Many others are thinking of opening offices in China.
While the shift would hit Indian bicycle component manufacturers, exporters pointed out that the new duty drawback rates back home was one of the reasons why they were forced to look towards China for sourcing components.
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