Car Engines in India: Domestic Manufacturing vs. Imports

India's automotive sector is diverse, with a mix of locally manufactured and imported car engines depending on the brand and model. This article explores the landscape of engine production in the country, weighing the pros and cons of both domestic manufacturing and imports.

Domestic Manufacturing

Many major Indian automobile manufacturers, such as Tata Motors, Mahindra Mahindra, and Maruti Suzuki, produce engines locally. These companies have invested significantly in establishing manufacturing plants in India, contributing to the country's automotive supply chain. Local production not only supports the domestic economy but also strengthens the country's automotive industry, enhancing its competitiveness in the global market.

Imports

While local production is strong, some manufacturers import engines, especially for higher-end models or specific vehicle types. For instance, foreign companies like Honda, Toyota, and BMW may import engines or engine components from their home countries or other global production facilities. This strategy is often adopted to ensure the availability of high-quality and advanced technology.

Considerations for Manufacturing Decisions

The decision to import or manufacture engines in India depends on several factors, including market demand and cost considerations. For lower-demand models, it makes sense to import engines, transmissions, and chassis components and assemble them locally. This approach allows manufacturers to control costs, meet deadlines, and maintain quality.

For high-demand, high-sales-numbered models, it is often more strategic to manufacture engines in India. This approach ensures a steady supply of engines, reduces dependency on imports, and enhances localization. However, setting up an engine manufacturing facility requires significant investments in both infrastructure and ancillary units. While this can be a long-term investment, it ultimately leads to cost savings and a stronger domestic industry.

Case Studies: Successful Engine Manufacturing in India

Examples like Tata Motors and Suzuki, which produce their own high-end luxury vehicles, demonstrate the advantages of locally manufactured engines. These companies often import completely knocked-down (CKD) units and assemble them in India to cut costs.

Many German brands, such as BMW and Mercedes-Benz, have set up assembly lines in India due to the lower cost of labor. They import engines in CKD form and pay lower duties (18%) compared to complete build units (34%). Practical examples include the Polo and Duster models. These companies use India as a central assembly hub and ship completed products back to their home countries and other markets like Africa and Europe.

Mahindra Mahindra has developed its own India-built engine, the M-Hawk, which has 140 bhp. While the design of the engine involves numerous engineering solutions, the engine is patented under Mahindra, making it an Indian creation. Similarly, Royal Enfield has its own engine manufactured in its Chennai plant, adding to the local content in India's automotive industry.

In conclusion, the choice between domestic manufacturing and importing engines in India depends on market demands and cost considerations. Local production supports the domestic economy and enhances the industry's competitiveness, while imports ensure access to advanced technology and components. As India's automotive sector continues to evolve, the balance between local and imported engines will remain a key factor in shaping the future of the industry.