Commerce and Industry Minister Piyush Goyal has said that the government may have to look at the practices of some of the players in the auto sector who get dictated on the source and pricing of imports of components from their parent companies.
“I personally think there is a question mark on transfer pricing in that, there is a question mark on fairplay. I personally believe that at some point the government may also have to get into greater detail on this issue,” the minister said at the 63rs Annual Convention of Society of Indian Automobile manufacturers.
He said some companies claim a high level of indigenisation but as soon as one gets into their supply chains it is seen that they are still dependent on imports often being dictated by their parent companies from where this component supplier would source, pricing at which it will be sourced.
The minister said that the government may also have to take retaliatory action against countries that do not allow access to Indian steel companies but are permitted to send the metal to India.
He was referring to some companies importing automotive steel from their parent country.
The auto industry is still dependent for 20% of its requirement on imports and this dependence varies across companies which shows that some of them are importing by choice.
He also dismissed the contention of some of the global auto companies who say that they bring investments into India. “Investments come to India because of its market size.”
“Bringing investments into India does not mean that we would have to continue to import goods into India that are available locally at competitive price and of very high quality.”
He also slammed the practice of some companies who route their investments from one geography and import components and inputs from third countries that are not very friendly to India.
“Where things are getting unnecessarily imported without India getting an equal opportunity in those countries I would be tempted …” Goyal said without elaborating.
He said India may also have to look at products coming from other countries at zero duty under the free trade agreement more carefully to see whether there is a level playing field between our Indian supplier and the countries from which their products are coming.
Non-tariff barriers created by some countries, written or unwritten, by which they get together not to allow goods from other countries those are areas of concern, the minister added.