Leyland in talks for Thailand facility

Ashok Leyland Ltd, the flagship company of the Hinduja group and India's No. 2 commercial vehicles maker, is considering setting up a base in Thailand.

When queried whether there have been talks with the Thai Summit Autoparts Industry Co, K Sridharan, executive director, finance, said, "A lot of discussions have taken place with Thai Summit but we have not yet finalised anything about which I can talk about."

Sridharan said that the company's has been exploring various possibilities of setting up a base in Thailand and conducting feasibility studies.

If negotiations with Thai Summit succeed, it will be mainly doing sheet metal work for Ashok Leyland, he added. Thai Summit is one of the largest supplier of motorcycle components in Thailand.

The Thai auto components industry is about the same size as India's, estimated at about $5 billion. The former exports about $2 billion which is almost double the exports India does.

Thailand has the advantage of being the largest auto manufacturer among Asean nations. It has 709 component manufacturers who supply directly to 15 vehicle manufacturers and assemblers.

The country has another 1,000 tier II and tier III players manufacturing casting, forging, mould and dies, heat treatment, plastic and rubber.

While talks were happening between the two countries on a Free Trade Agreement (FTA), some commercial vehicle makers, auto and auto component manufacturers in India were concerned about the development as Thailand has a comparative advantage over India in manufacturing auto components.

With the FTA first phase going through, the commercial vehicle and auto component manufacturers are getting their act together in setting up base in low cost destination than India which would include China and Thailand.

India had entered into an agreement to implement the first phase of FTA with Thailand during July last year. The first phase is called the Early Harvest phase, and both the countries had agreed to reduce tariffs on 82 items in the next three years.

The 82 items include gearboxes, television picture tubes, wrist watches, parts of seats, compressor type refrigerators, textile spindles, spinning rings, flyers, machinery for moulding, pipes, boiler shells, ball bearings, flywheels, pulleys, signalling equipment and printed circuits, etc.