Jakarta. Indonesia’s plan to import commercial vehicles worth nearly Rp 25 trillion ($1.6 billion) from India is drawing mounting criticism from industry groups and lawmakers, who warn the move could weaken domestic manufacturing capacity and threaten jobs amid sluggish local demand.

The plan involves the procurement of 105,000 commercial vehicles valued at Rp 24.66 trillion to support the government’s Red and White Cooperatives program. The vehicles are to be supplied by Indian automakers Mahindra & Mahindra and Tata Motors.

The Association of Indonesian Automotive Industries (Gaikindo) said domestic manufacturers have ample capacity to meet demand for light and medium commercial vehicles, particularly two-wheel-drive (4x2) pickup trucks commonly used for rural logistics.

Gaikindo represents 61 automotive companies with a combined annual production capacity of around 2.5 million four-wheeled vehicles. For pickup trucks alone, seven member firms — including Suzuki, Isuzu, Mitsubishi, Toyota, Daihatsu, Wuling and DFSK — have a combined capacity exceeding 400,000 units per year, much of which remains underutilized.

“These vehicles already have relatively high local content levels, exceeding 40%, and are supported by extensive after-sales service networks across Indonesia,” said Gaikindo chairman Putu Juli Ardika.

He said domestic manufacturers are technically capable of supplying the vehicles needed for the program, although sufficient lead time would be required to meet specific volumes and technical criteria.

“If given adequate time and opportunity, Gaikindo members and component manufacturers under GIAMM can participate in meeting this demand,” Putu Juli said, adding that large-scale imports could worsen employment risks at a time when domestic sales have been weak.

Indonesia’s automotive ecosystem employs around 1.5 million workers nationwide. Domestic vehicle sales have remained below one million units annually in recent years, while exports have stayed resilient, reaching more than 518,000 units shipped to 93 countries.

Lawmakers Raise Red Flags

Concerns have also emerged in parliament. Vice Chair of House Commission VII Evita Nursanty said the procurement could reshape Indonesia’s automotive industry if not carefully designed.

“This is procurement on a very large scale,” Evita said in Jakarta on Friday. “Its impact goes beyond village logistics and directly affects the national automotive industry.”

She cited assessments from the Industry Ministry showing that Indonesia has the capacity to produce up to one million pickup trucks annually, particularly 4x2 models, which she said are sufficient for most village logistics needs.

Evita questioned whether procurement specifications — especially if they favor four-wheel-drive (4x4) vehicles — are justified.

“Most village roads do not require 4x4 capability. If certain regions with extreme geographic conditions need it, those should be mapped specifically and not generalized,” she said.

Evita also reminded the government that local product prioritization is mandated under Law No. 3/2014 and Presidential Regulation No. 46/2025, which require ministries and state institutions to prioritize products with a minimum local component score of 40%.

“Imports are only allowed if domestic products are unavailable or insufficient,” she said. “That argument must be explained objectively.”

Initial financing for the cooperatives will be sourced from village funds, state and regional budgets, as well as loans from state-owned banks.

President Prabowo Subianto plans to establish cooperatives in up to 80,000 villages across Indonesia to serve as rural-level food distributors, stimulate local economies and reduce the role of middlemen.

According to media reports, each cooperative will receive between Rp 3 billion and Rp 5 billion in initial capital, which may be used to purchase facilities such as warehouses and cold storage units.

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