Pursue FTAs in Africa, Latam to push exports: Auto industry

With automobile exports in slow lane, the industry has asked the government to aggressively pursue FTAs with nations in Africa, Latin America and Asean region that do not have strong manufacturing base, besides asking for enhanced duty drawbacks.

By: | Published: June 12, 2016 3:27 PM
According to sources, a study conducted by iMaCS on behalf of the industry has also been submitted to the ministry suggesting various measures in order to accelerate exports. (PTI) According to sources, a study conducted by iMaCS on behalf of the industry has also been submitted to the ministry suggesting various measures in order to accelerate exports. (Reuters)

With automobile exports in slow lane, the industry has asked the government to aggressively pursue FTAs with nations in Africa, Latin America and Asean region that do not have strong manufacturing base, besides asking for enhanced duty drawbacks.

Proposing a list of interventions that can help rev up automobile exports, the industry has asked the Commerce Ministry to adopt a holistic approach to address tariff and non tariff barriers in the potential export markets of Africa, Latin America, Asean and Saarc countries.

According to sources, a study conducted by iMaCS on behalf of the industry has also been submitted to the ministry suggesting various measures in order to accelerate exports.

The government should aggressively pursue FTAs (free trade agreements) with countries that do not have a strong manufacturing base for automobiles, according to the study.

In Africa, FTAs should be pursued with Algeria, Egypt, Nigeria and South Africa, while in Latin America the government should try to pursue FTAs with Chile, Peru and Colombia, it said.

Of the total automobile exports of around USD 8.86 billion in 2015-16, Africa alone accounted for 30-35 per cent of the total overseas shipments in value terms.

Automobile exports from India to Latin America stood at USD 91 million in 2004-5. It grew to USD 1,044 million in 2013-14.

The study further said FTAs with countries like Philippines, Myanmar, and Vietnam should be pursued.

For Saarc nations like Sri Lanka, Nepal, Bhutan and Bangladesh, the auto industry wants the government to press for reduction in import tariffs on its vehicles and components in these countries.

"While India has given free access for automobiles to these countries we have not got reciprocal tariff concessions. Need government interventions to reduce import tariff for Indian automobiles and parts," sources said.

Asean, Africa and Latin America are the fastest growing markets for automobile exports from India since 2004-05. However, exports to Europe, which was once the biggest market, and Saarc nations have been declining.

Stressing on the need for a holistic approach to rev up exports, the study said tariff disadvantage of 25 to 40 per cent is likely to emerge vis-a-vis competing countries in all the potential markets of Africa, Latin America, Asean and Saarc.

In Latin America, India's competing countries like Japan and South Korea have already signed FTAs with many nations.

"Coherent trade strategy by way of free trade agreements (FTAs) with key markets is needed to address this tariff disadvantage," sources said.

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