The troubled subsidiary of South Koreas Daewoo Motor had export obligations totalling Rs 995 crore for import of completely-knocked-down (CKD) kits of the Matiz and Cielo cars, company officials said.
The company, which has currently stopped production at its plant near Delhi due to lack of demand, is behind schedule on neutralising its imports of car kits, as per a memorandum of understanding (MoU) signed with the government in 1997.
The Centre had last week liberalised the imports of CKD or semi-knocked down (SKD) kits by withdrawing the export obligation against imports of such kits for those joint venture automakers which had signed the MoU in 1997. This followed Indias commitment to the WTO that it would issue necessary notifications before September this year, to make its Auto Policy fully WTO-compliant. A spokesman of Honda Siel Cars India, which makes the mid-size car City and luxury car Accord, said the company would gain substantially from the withdrawal of this condition but declined to provide monetary details.
It is certainly a benefit to us. We had earlier requested the director- general of foreign trade (DGFT) to help us, as our exports were very limited and our obligations were quite large, the HSCIL spokesman said.
Hindustan Motors president (Automobile Division) B Katurvedi said the DGFT notification would help the company although it was close to fulfilling its export obligations under the MoU.
Prior to the lifting of quantitative restrictions in April 2001, automakers were required to sign an MoU with the DGFT, under which they were obliged to achieve localisation of a minimum of 50 per cent by the third year and 70 per cent by the fifth year from the date of its first imports of CKD and SKD kits.
Signatories were also required to balance imports of auto-kits with exports of cars or car parts of equal value.
India abolished its import restrictions including the restrictions and licensing requirements applicable to CKD and SKD kits and components in April 2001.