Wary of fresh WTO text, automakers may meet Nath

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Auto industry leaders, including Ratan Tata, Rahul Bajaj, Anand G Mahindra and Pawan Munjal, are likely to hold talks with commerce and industry minister Kamal Nath soon to voice their opposition against the continued inclusion of certain provisions in the World Trade Organisation’s revised text on industrial goods, that has the potential to severely hurt the sector.

Despite earlier objections regarding inclusion of specific clauses on anti-concentration, sectorals and on remanufacturing by industry bodies such as CII, Ficci and Assocham, the new text, released on Thursday, continued to have these provisions. The industry bodies had even written to WTO director general Pascal Lamy on this aspect.

As per the ‘Anti-Concentration’ clause, sensitive tariff lines that would not be subject to tariff reduction cannot be concentrated in one particular sector. In the sectoral talks, certain sectors would be culled out from the entire list of goods and tariffs on these items would be brought down to zero within a specified period that would be decided during the talks.

Sugato Sen, senior director, Society of Indian Automobile Manufacturers, the apex Industry body representing 38 leading vehicle and vehicular engine manufacturers in the country, told FE that the auto sector heads would soon impress upon the commerce minister and other senior government officials not to accept these provisions. “We are very concerned. These clauses, if included in the final deal, can kill the auto industry in India and other developing countries. It will drastically reduce tariffs in the country and create distortion in the market,” he said.

“Besides, at a time of increasing inflation and global slowdown, it also would result in investments into the sector going awry. This will result in taking away through the back door the flexibilities of the developing countries,” he said, adding that the provisions on remanufactured goods would lead to India being a dumping ground for the used cars and waste components from the developed world.

According to Siam, the overall revenue of the automobile industry in India, excluding components, stands at Rs 1,48,000 crore in 2007-08, a CAGR of around 12% since last five years. Similarly, the auto component industry in India is growing at a CAGR of 27.2% since 2002-03 and is expected to touch $18 billion in 2007-08. This includes exports worth $3.6 billion and imports of $4.9 billion.