Indonesia Pauses Major Truck Order from Tata Motors and Mahindra
Indonesia has put a massive order of 105,000 trucks from India’s Tata Motors and Mahindra & Mahindra on hold. The decision follows a strong pushback from local policymakers and business groups.
The deal was part of President Prabowo Subianto’s plan to create over 80,000 community cooperatives across the country. These trucks a mix of 4x4s and six-wheelers were intended to transport goods like fertilizer and support cold storage in rural areas. However, Cooperatives Minister Ferry Juliantono confirmed in a recent TV interview that the imports are paused until the government and lawmakers can meet.
“Pausing is the right step to avoid further controversy,” Juliantono said. “When the time comes, we will sit down together to find the best solution.”
Local Concerns Over Industrial Goals
The proposed deal sparked debate in Jakarta. Local business associations argue that importing thousands of vehicles goes against the government’s goals of boosting local industry and creating jobs.
This tension comes at a difficult time for the Indonesian auto market. Major foreign carmakers with local factories, such as Toyota, are still struggling to reach their pre-pandemic sales levels. High prices and cautious bank lending caused car sales in Indonesia to drop by 7.2% last year.
A Major Blow to Indian Exports
For the Indian companies involved, this pause affects record breaking deals:
- Mahindra & Mahindra previously stated this would be its largest export order ever, involving 35,000 Scorpio Pik Up trucks to support Indonesia’s food security.
- Tata Motors was set to deliver 35,000 Yodha pickups and 35,000 Ultra T.7 trucks, marking its biggest entry into the Indonesian market.
Representatives for both companies have not yet commented on the delay.
The Case for Domestic Production
Indonesia’s Industry Ministry noted that the country already has the capacity to produce about 1 million pickup trucks a year. Brands like Toyota, Suzuki, and Mitsubishi already have a strong manufacturing presence in the nation.
Industry Minister Agus Gumiwang Kartasasmita stated that if 70,000 of these trucks were made locally instead of imported, it would add approximately 27 trillion rupiah ($1.6 billion) to the local economy and create many new jobs.
Next Steps for the Government
Earlier this week, Parliament Deputy Speaker Sufmi Dasco Ahmad called for a halt until President Prabowo returned from his overseas travels. The President returned to Indonesia early Friday morning.
The trucks were originally ordered through PT Agrinas Pangan Nusantara, a new state-owned company focused on making Indonesia self sufficient in food production. The government must now decide whether to continue with the Indian imports or shift production to local factories.
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