Foreign OEMs to tap supplier base of Indian partners

Taking advantage of the low cost of manufacturing expertise here, many of the global auto giants including Kawasaki, Nissan, Volvo, Daimler, Renault and Fiat are tapping the component supplier base of their joint venture (JV) partners in India.

These Japanese and European two- and four-wheeler firms source 'easy-on-pocket' auto components through their partners in India, which include Bajaj Auto (for Kawasaki and Renault), Ashok Leyland (for Nissan), Eicher Motors (for Volvo), Hero Group (for Daimler), Tata Motors (for Fiat).

The combined sourcing deals from all the companies could be in excess of $7-8 billion in the next three years. The sourcing will primarily cater to the mother plants of such auto giants in the overseas markets.

Common components that are sourced include axle assembly, propeller shaft, crank shaft, cylinder heads, bearings and cylinder blocks. Sourcing such components from India offers companies a 25-30 per cent cost advantage.

Volvo India Managing Director Eric Leblanc said, "Our partnership with Eicher Motors is also aimed at enhancing our sourcing from here. We will work together as part of a larger plan to check components, which could be exported to other regions like Europe and US."

Bajaj Auto will source technology from its Japanese collaborator Kawasaki to fuel its ambitions in building high-end bikes for Indian and overseas market.