The Society of Indian Automobile Manufacturers (SIAM) has lashed out at the Government for preparing the ground to cut duties on imported vehicles from Europe while seeking to impose additional taxes on diesel cars.

The automobile industry body expressed serious concern over the reported move by the Government to go out of the way to oblige the European Union in the proposed India-EU free trade agreement (FTA) by giving away too much. “Cutting import duties is not going to result in any kind of benefit to the auto makers. It is also a contradictory policy. We are talking about discouraging production and use of large and diesel cars in India. For the same type of cars, however, we will be reducing the import duty under the FTA and making imports cheaper,” SIAM said in a statement.

The industry body has opposed cutting of duties on fully-built cars imported from Europe as has been demanded by the EU as part of the ongoing FTA negotiations with India. “SIAM understands from EU sources that India has made an offer to EU for reducing tariff of all cars from 60 per cent to 30 per cent,” it said.

Additionally, a certain number cars, much more than what EU was exporting to India today, could be exported by EU at a highly reduced duty of only 10-15 per cent, it added. Such a move, it said, would be a total reversal of the policy of high tariffs to force investment, local manufacturing, local value addition and local employment and would not result in any benefit to the Indian auto manufacturers.

Citing trade data of the Ministry of Commerce, it said already the trade imbalance in the automotive sector was in favour of the EU. During 2010-11, EU was already exporting around $3.4 billion worth of cars as completely built units (CBUs) and completely knocked down units (CKDs), against India's exports of $1.7 billion worth of cars, it said.

More In: Business | Industry