India will protect domestic auto industry's interest in European Union FTA

Indian Government could be on the brink of announcing another Free Trade Agreement (FTA) this time with European Union. However, the government is still toying with the idea as they do have their own reservations. Heavy Industries and Public Enterprise Minister Praful Patel had been clear in saying that they are looking at mutual benefit from the deal. If the government is going to waive some part of the excise duties on the imported vehicles from the countries in question, then India also stands to be in a position to reap some benefits out of it.

The new FTA is not something new for our country where the car manufacturers like Mahindra and Mahindra have been benefiting so far with the similar treaties with Malaysia, South Korean and ASEA(Association for South East Asia ) Nations. More than anybody, its Mahindra and Mahindra who is more likely to rejoice.  It’s not unknown that M&M has a Korean subsidiary SsangYong Motor Company under its wing. The FTA with South Korea puts the domestic car manufacturer in an advantageous position when the SsangYong SUVs imported into the Indian auto industry. It is basically a deal to work out well for both the parties involved.

Coming to the exports, the countries on the other end also need to throw in some incentives like an excise duty exemption over the exported vehicles from a domestic car manufacturer.  Passenger cars like Mahindra XUV 500 apart from Mahindra's commercial vehicles are exported to other countries like South Africa and Brazilian market with these kind of benefits. The Japanese car manufacturer Nissan is thinking along the same lines to carry out its global car imports making India as the manufacturing base. Tata Motors is another domestic car manufacturer who has Indonesia market on the anvil to export its small car Tata Nano right from India against setting up a new manufacturing base in the South East Asian country.

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