Domestic automobile makers have asked the government not to agree to reduce or eliminate tariffs on Completely Built Units (CBU) for finalising Free Trade Agreements (FTA) with European Union and the Regional Comprehensive Economic Partnership (RCEP)-member countries.
Cutting tariffs on CBU (or fully assembled automobiles) will hurt job creation, technology transfer to local firms and prevent the Indian auto industry from being internationally competitive, they said.
RCEP is a proposed FTA among 16 Asia-Pacific countries, including China and India.
In meetings with the commerce ministry officials,the Society of Indian Automobile Manufacturers (SIAM) demanded that before taking forward FTA negotiations with the EU and RCEP members, the government should publish a review of its existing FTAs with the Association of South East Asian Nations (ASEAN), Japan and Korea from a ‘Make In India’ perspective to show whether these agreements are hurting domestic manufacturing due to increased imports.
India has been maintaining high duties on CBUs to discourage imports and boost local manufacturing. The country’s import duty on passenger cars ranges between 60-100 percent (as against the EU’s 10 per cent). RCEP members had just convened the 12th round of FTA talks while the India-EU FTA negotiations have stalled since 2013 after 16 rounds.
Mr. Sugato Sen, Deputy Director General, SIAM, told The Hindu that SIAM – noting that the EU had been demanding India agree to drastically reduce or eliminate duties on CBUs to help restart the FTA negotiations – had pointed out to the commerce ministry that the EU had been for long protecting its interests especially in segments like pick-up trucks with a relatively high duty of 22 per cent.
Mr. Sen said, therefore India also should maintain high duties on CBUs to protect domestic manufacturers.
Speculation on the possibility of India agreeing to reduce or eliminate duties on CBUs as part of the India-EU FTA have led to similar demands from automobile manufacturing major nations like Japan and Korea.
In a white paper on FTAs,the SIAM said though India had over 20 firms manufacturing cars and utility vehicles, its auto industry had not matured enough.
