The auto industry needs to gear up for the future to become competitive and not hide behind tariff walls, commerce secretary Rahul Khullar said on Wednesday. He was speaking to reporters during the release of the strategic paper on auto exports by engineering export council EEPC India.
Khullar said that the Indian auto industry had to upgrade itself to match global standards to seize the opportunity of economic activity shifting away from the Western world. ?Auto industry is going to move out of Detroit and Germany. It is not possible for them to be competitive at their wage rates?comparative advantage will shift from that part of the world,? he said.
?You have to start thinking about ten years from now?Today we live under this illusion that these tariffs are here to stay permanently. It is to say that everything can else (import duty on other products) can go down to 7.5% or 10% but tariffs on auto will not go,? he added.
The EEPC India has set a target that the auto sector should contribute 10-11% of the country?s GDP by 2016. In order to achieve that Indian auto industry has to grow at a rate of 23-25% and reach $ 35-42 billion in the next six years. ?Are we sure we are going to get there with the pervasive tariff structure in the auto industry. It is when you have a competitive and vibrant domestic auto industry everything else will fall into place,? he said.
In the engineering exports globally, automotive parts account for a major chunk contributing nearly $1 trillion in 2008, a little less than 20% of the total engineering exports. India is ranked 26th in the total auto exports with a meager 0.53% share in world auto exports in 2008. Currently auto exports are roughly around $ 5.5 billion or 4.6% of India?s overall export basket.