FTAs May Hurt Make in India Drive, Says Auto Parts Industry

USD 11-bn domestic auto component industry took aim at govt\'s move to go for more FTAs, saying it would only go against its Make in India drive.

Published: 17th February 2016 07:54 PM  |   Last Updated: 17th February 2016 07:54 PM   |  A+A-


MUMBAI: The USD 11-billion domestic auto component industry today took aim at the government's move to go for more free trade agreements (FTAs), saying it would only go against its Make in India drive and render the domestic industry uncompetitive.

"For Make in India, we should be competitive. We have not gained from any FTAs," Arvind Balaji, Joint MD of Lucas TVS, and President of industry body Auto Components Manufacturers Association, told reporters here at the ongoing Make in India Week.

"If you don't give a level-playing field, we won't achieve our full potential."

The government is in discussion with the EU and Australia for FTAs. The country already has such trade pacts with ASEAN.

Because of the FTAs, he said, raw materials attract higher import duty while imports of finished goods have lower levies, thus making the sector uncompetitive.

"Don't handicap us and ask us to compete," he said, asserting that manufacturing results in value addition, which helps the domestic economy, whereas cheaper import of raw materials has limited benefits.

The industry is believed to have taken up the issue with the government.

Asked about the same, Union Heavy Industries Minister Anant Geete said his ministry interacts regularly with other ministries, including the commerce ministry, but declined to comment on this matter.

The auto industry body, SIAM, had last year said the proposed India-EU trade liberalisation pact would not benefit domestic automobile firms.

"FTAs with competing countries do not benefit the domestic automobile industry. It is against the concept of Make in India for local value addition and local employment and as such, completely built units (CBUs) of vehicles and engines should be kept in India's negative list under India-EU FTA," SIAM had suggested.

It had said duty on cars in the EU is only 10 per cent against India's import duty of 60-120 per cent.

"Domestically-made cars are already exported at 10 per cent duty to Europe. Obviously, we would not gain much by further reduction of EU duties for our cars, but if Indian duties are reduced by 50 per cent or even more, it would be a substantial reduction in tariff. The gains will clearly be for the EU industry," the industry body had noted.

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