Export target for auto sector set at $25 billion

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New Delhi, Sep 4 : Setting an export target of $25 billion in the next decade for auto exports from the present $6 billion, the government on Thursday gave a boost to the sector by including it in the Focus Market Matrix Scheme (FMMS) that gives sops to help the industry to make its presence in new markets abroad.

Exhorting the auto industry to increase its contribution to the country’s GDP from the present 5% to 10% in the coming decade, commerce and industry minister Kamal Nath said the government is determined to give top priority to the sector.

Talking to reporters on the sidelines of the Annual Convention of Society of Indian Automobile Manufacturers (SIAM), Nath said, “We will include the auto sector in the focus market (matrix) scheme. Presently the sector is not in the scheme, that is meant to help sectors get into markets which are difficult to penetrate.”

The FMMS scheme is a hybrid of ‘Focus Product & Focus Market’ schemes and is to help exporters to access existing markets with new products and penetrate the hitherto untapped markets with existing export products. The scheme aims to offset high freight cost and other externalities to select international markets with a view to enhance the country’s export competitiveness in these countries.

Exporters of these products to notified countries are entitled for Duty Credit scrip equivalent to 2.5% of FOB value of exports for each licensing year.

In this years annual supplement of the foreign trade policy Nath said had announced the inclusion of another 10 countries within the ambit of Focus Market Scheme to take the total number of countries in the scheme to around 45-50.

Nath said that the government will play its part by providing the “enabling policy framework” and added that the auto sector should take advantage of these and leverage their strengths for expanding to other parts of the world.

He said the country produced 1.7 million cars in the last fiscal and was among the top three carmakers in Asia and the top ten in the world.

He said by the middle of the next decade, India should be the destination of choice for design and manufacture of automotive components and vehicles in the world. The Minister said “ The Indian automobile industry today is all about scale. Maruti hopes to have a capacity of 1 million cars by 2010; Hyundai is looking at 600,000 cars in another year; Toyota is talking about 200,000 cars by year end; the Nissan Renault venture is planning a capacity of 400,000 cars. GM and Honda are setting up new plants, as is Tata for its Nano. “

Big volumes mean large investment, he said pointing to Ford’s planned investment of $500 million to expand its facility in Chennai, Leyland and Nissan’s planned investment of $500 million in three joint venture companies for their upcoming commercial vehicle project. He also referred to Daimler Trucks and the Hero Group’s planned investment of $1 billion over the next five years for their Greenfield truck and bus project in Chennai.

Nath said every job in the auto sector leads to four jobs in the related services sector.