Japanese suppliers in India: Responding to stricter emission regulations and EV policy

Strengthening business through JVs and alliances with Indian parts makers



Automaker assembly plants in India (Click to open the base map)

 The Indian motor vehicle market has been sluggish since the latter half of 2018. In the nine-month period January through September 2019, the number of vehicles produced was 3.51 million units (a decline of 12.9% compared to the same period in the previous year), and sales of new vehicles fell precipitously by 15.9% to 2.84 million units in the same period. Factors contributing to the decline include liquidity tightness, abnormal monsoon rainfall, increasing insurance costs, rise in fuel prices, new emission regulations, and uncertainty in government policies. In August 2019, the government of India took measures to revitalize the automotive sector but it has not yet recovered.

 In this environment, the government implemented the BS-VI exhaust emission regulations for passenger cars from April 2020, and is also proceeding to strengthen safety regulations. In addition, Phase II of the FAME scheme (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) was started. In 2023, the use of internal combustion engines will be banned for 3-wheeled vehicles and in 2025 for 2-wheeled vehicles.

 Under such circumstances, Suzuki has begun to introduce vehicles compliant to BS-VI. The major domestic manufacturers have also started to obtain BS-VI approval for their engines. Regarding the EV (electric vehicle) promotion policy, Toyota and Suzuki have reached a basic agreement for the mutual supply of vehicles including hybrids. Maruti Suzuki announced a prototype electric vehicle for testing on public roads as part of its plan to introduce electric vehicles by 2020.

 To bolster its production system, Suzuki Motor Gujarat completed construction of its second plant and began production of the Swift in January 2019. Hyundai Motor, along with expanding the production capacity at its plant in Tamil Nadu, is planning to begin production of electric vehicles there. Besides these, OEMs are proceeding to enhance production capacity, including MG Motors India (subsidiary of SAIC-China) and Kia Motors India starting production at new plants, respectively, and the PSA Group establishing a new plant.

 In response to increased orders and planned production expansion of the OEMs, Japanese component and materials suppliers are also proceeding to enlarge production capacity and making new entries into India. Toyoda Gosei is building a new plant for airbags, Nishikawa Rubber is proceeding with its 3rd plant for seals, NSK has started operations at a new plant producing electric power steering (EPS) products, ASTI is constructing a new plant for on-board electrical components, and Hi-Lex is continuing with facilities expansion at its 3rd plant in India. In the materials area, Mitsubishi Chemical has established new facilities for the manufacture of thermoplastic elastomers at its acquired plant and Nippon Steel is going ahead with the acquisition of the number 4 steel maker in India, Essar Steel India Limited.

 In the field of electrification, Panasonic has installed a station for EVs and is considering the entry into a charging network. Furukawa Electric is planning the expansion of its business area into the electrification market. There is also much movement to strengthen production, sales, and development systems through joint ventures and alliances with Indian parts makers.

 Below are the recent activities of Japanese automotive component suppliers in India. (Activities for the 15-month period through September 2019.)


New entry (products manufactured)

Establishment of new companies and plants Daiki Aluminum Industry Co., Ltd. (secondary aluminum alloy ingots); Kaiho Sangyo Co., Ltd. (joint venture for automotive parts and materials recycling); THK Co., Ltd. (linear motion components, “LM Guide”); Topy Industries, Ltd. (starting production of steel wheels at a joint venture company); Nihon Seima Co., Ltd. (floor mats); Nippon Steel Corporation (acquisition of Essar Steel); Panasonic Corporation(EV charging network); Murakami Corporation (mirrors).


Increased production capacity (products manufactured, *: new products added)

Expansion of facilities or buildings NGK Spark Plug Co., Ltd. (ignition plugs, *oxygen sensors for motorcycles: plant expansion); Hi-Lex Corporation (control cables, window regulators: expansion of facilities at three plants, including additional plant building at one site).
Construction of two or more plants Kansai Paint Co., Ltd. (automotive paints: construction of new plant); TPR Co., Ltd. (powertrain components: new plant and expansion of facilities); Toyoda Gosei Co., Ltd. (air bags, steering wheels, etc.: construction of fifth plant); Nishikawa Rubber Co., Ltd. (automotive seals: construction of third plant); NSK Ltd. (electric power steering: construction of fourth plant); Musashi Seimitsu Industry Co., Ltd. (new plant for automobile components).
Establishment of new companies ASTI Corporation (electrical automotive products: establishment of second manufacturing site).


Strengthening of operations (item, *: new business, etc.)

Subsidiaries, JVs, acquisitions Nichirin Co., Ltd. (local subsidiary becomes joint venture: hose); Kobe Steel, Ltd. (joint venture becomes wholly-owned subsidiary: machinery for rubber and tires); Sanyo Special Steel Co., Ltd. (joint venture becomes subsidiary: specialty steel products); DIC Corporation (acquisition of Indian paint resins manufacturer: resins for automotive paints); Furukawa Electric Co., Ltd. (acquisition of joint venture’s management rights: wire harnesses, electrification products); Mitsubishi Chemical Corporation (acquisition of Indian business, in-house production of thermosetting elastomers).
Sales and development sites Toyobo Co., Ltd. (establishment of sales office in southern India: engineering plastics); Toyota Boshoku Corporation (opened sales office in northern India: seats).
Dissolutions Tanaka Seimitsu Kogyo Co., Ltd. (dissolution of local subsidiary, furtherance of business at Thai subsidiary).


Related reports:
India: Muted market growth and jump to BS-VI regulation (Sep. 2019)
Future Mobility Show 2019: Clean and sustainable future mobility for India (Apr. 2019)
National Auto Policy: overall development of Indian auto industry (Jan. 2019)

<Japanese Supplier Reports>
  U.S. and Canada: Expanding CASE business and local collaboration (Sep. 2019)
  ASEAN: Components and materials for electrification on the rise (Aug. 2019)
  China: Expanding the supply of parts and materials for NEVs (Jun. 2019)
  East China: Responding to NEV market expansion (May 2019)
  Central and Eastern Europe: Responding to orders from European OEMs (Jun. 2019)
  Western Europe: Meeting increasing demands for electrification and others (May 2019)
  India: Meeting tighter emissions and fuel economy regulations (Nov. 2018)
  Mexico: Focusing on Changes to NAFTA (Oct. 2018)