Logo of Phnom Penh Post newspaper Phnom Penh Post - Indian auto firms plan factories

Indian auto firms plan factories

Tata International displays one of its Farmtrac tractors yesterday at the Indee Cambodia engineering expo at Koh Pich in Phnom Penh.
Tata International displays one of its Farmtrac tractors yesterday at the Indee Cambodia engineering expo at Koh Pich in Phnom Penh. Heng Chivoan

Indian auto firms plan factories

Two major Indian auto manufacturers are increasing their presence in Cambodia by setting up manufacturing facilities to target the potential in the Kingdom’s automotive sectors, a representative from a visiting Indian business delegation said yesterday.

Speaking on the sidelines of engineering expo Indee Cambodia, Ravi Sehgal, vice chairman of the Engineering Export Promotion Council of India (EEPC), said Tata International and Bajaj Auto will open manufacturing plants in Cambodia, with the former focusing on light commercial vehicles and Bajaj sticking to two and three wheelers.

“We have discussed with the Cambodia Chamber of Commerce the possibility of setting up the Tata plant in Sihanoukville Special Economic Zone,” he said, referring to the 1100-hectare Chinese-owned industrial park on the outskirts of Sihanoukville.

He said Tata will look to import vehicles from India, but will supplement this with manufacturing operations possibly starting next year.

Parth Krishna, the business management officer for Bajaj Cambodia, confirmed the company’s foray into manufacturing in Cambodia, adding that it had started construction of a plant in Stung Meanchey and was awaiting final approval from the Council for Development of Cambodia before commencing operations.

“When we get full approval we can start importing all the machinery and run at 100 per cent [capacity],” Krishna said. “The project is for assembly and manufacturing of some certain parts. We don’t build the engine here, but we will produce seats and other small parts.”

Krishna said Bajaj had spent $2 million so far to build the plant. While the group had had sold around 300 to 400 three wheelers in Cambodia so far, Krishna said that number would go up as the price would fall once they start manufacturing here.

“The market for our three-wheel vehicles is different from tuk-tuks,” he said “But right now import taxes are very expensive, so the price of three-wheelers is expensive, around $2,500.”

Peter Brongers, president of the Cambodia Automotive Industry Federation, said the industry body had discussed the potential for cooperation with Tata.

“I think they can be very successful as price and quality is good,” he said. “Maybe they will start with complete knock-down kits first, but at the moment it is not financially feasible to set up a complete manufacturing plant from scratch.”

The Indian government, as part of its Act East policy, announced last year that it will encourage Indian businesses to set up manufacturing operations in the CLMV region – comprising Cambodia, Laos, Myanmar and Vietnam – in a bid to tap into China’s supply chain.

Indian Ambassador to Cambodia Naveen Srivastava said the push to set up in CLMV was backed by $100 million in funding by the Indian government, adding that Cambodia’s low labour cost, access to the regional market and the Kingdom’s Industrial Development Policy make it an attractive offering.

“I see products from all around the world here, but not from India and we would like for Cambodians to see that Indian products are good quality,” he said.

On the issue of increasing bilateral trade, Sehgal said India would use an incremental approach to bolster the trade of products with Cambodia.

“We will see more Indian products available here step by step. By 2017, there will be a lot more awareness [of Indian products],” he said.

Bilateral trade between the two countries was around $500 million in 2015 and could increase three or four times by 2020, he added.

MOST VIEWED

  • Hun Sen ready to ‘break record’, says Rainsy lost

    Caretaker prime minister Hun Sen used a meeting with 18,400 factory workers on Wednesday to predict that he would beat the record for being the world’s longest-serving non-royal leader. He also used the platform to slam political opponent Sam Rainsy who he said had lost

  • Sihanoukville land prices skyrocketing amid breakneck development

    Sihanoukville, the Kingdom’s most famous beach destination for tourists, is seemingly becoming a paradise for Chinese investors as well. The huge influx of Chinese investors has caused property values to rise, especially the price of land, which has nearly doubled in some places near

  • US names new ambassador to Cambodia

    US President Donald Trump on Friday appointed W Patrick Murphy as the new US Ambassador to Cambodia, replacing incumbent William A Heidt. A press release posted on the White House’s website said nominee W Patrick Murphy is currently acting principal deputy assistant secretary at

  • Kingdom is at a crossroads between East, West after poll

    It was dubbed a success by caretaker prime minister Hun Sen after the electoral victory of his Cambodian People’s Party (CPP), which is poised to take all seats in the National Assembly. But the July 29 national election has not been positively looked at by