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FTAs may hurt Make in India drive, says auto parts industry



The Rs 74,800-crore domestic auto component industry on Wednesday criticised 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 in Mumbai at the ongoing Make in India Week.



“If we don’t give a level-playing field, we won’t achieve our full potential.”

The government is in discussion with the European Union (EU) and Australia for FTAs. The country already has such trade pacts with Asean. Because of the FTAs, he said, raw materials attracted higher import duty, while imports of finished goods had the lower levies, thus, making the sector uncompetitive.


“Don’t handicap us and ask us to compete,” he said, asserting that manufacturing resulted in value addition, which helped the domestic economy, whereas cheaper import of raw materials had 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 interacted 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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