Minister bats for industry as EU seeks sharp cut
Ahead of the ministerial-level talks between India and the European Union on the proposed broad-based trade and investment agreement (BTIA) later this month, the heavy industry ministry has supported a ‘calibrated’ approach on the contentious issue of reducing tariff structure for cars imported from the EU.
This assumes importance in the backdrop of the stand of the Indian automotive industry, which is against any duty concessions to the EU car-makers. The EU, however, is demanding sharp duty cuts on cars imported by India.
Heavy industry minister Praful Patel, in a recent discussion with commerce and industry minister Anand Sharma, cautioned that the interest of the domestic industry needs to be protected, but a duty cut can be considered in a ?calibrated? approach. ?If the government has to consider a duty reduction, then it can be considered later in a calibrated manner,? Patel is said to have told Sharma.
When contacted, Patel told FE, ?The department of heavy industry reiterated its stand that the interests of domestic manufacturers need to be protected? If the government has to consider a duty reduction, it can be considered later in a calibrated manner.?
India and the European Union have been negotiating hard over the proposed BTIA, where the EU has been demanding a reduction in the basic custom duty on imported cars from 75% to 30%.
If the concessions, are granted by India, it is expected to benefit not only luxury car-makers like Audi, BMW and Mercedes, but also mainline players, such as Volkswagen, Fiat, Skoda and Peugeot.
However, this move comes after discussions held at the India-EU Summit in New Delhi in February where Sharma told EU trade commissioner Karel De Gucht that the auto industry is in a nascent stage in India, giving the government very limited room to manoeuvre duty cuts.
Even the Japanese and the Korean car-makers have opposed any concessions to EU auto-makers as both have made heavy investments in India over the past several years to nurse the auto industry to its present stage. Duty cuts on EU cars could disrupt the level playing field for them.
Also, any such reduction in duties will be a clear deviation from the commitments made by the government under the Automotive Mission Plan (AMP) 2016. The AMP 2016 had envisaged revenues of $145 billion by 2016 for the Indian auto industry, accounting for 10% of the GDP and creating 25 million jobs.