Probability of duty cuts in FTA with EU worries auto industry

Recently the auto industry has cautioned the government regarding the European Union demand on lowering duty on imported cars in the proposed Free Trade Agreement (FTA). The companies cautioned India by saying that if such concession on the import duties would be given to the EU's, then in the future the investment in the country by the Automobile industries would reduce.

This concession to the EU's would surely create disparities among the major companies from Japan and Korea with those from Europe. The Asian companies also said that by taking this move the Indian government would be deviating from the commitments that it had made while formulating the Automotive Mission Plan (AMP) 2016.

Pawan Goenka President of Society of Indian Automobile Manufacturers said that the import duty range on CBU's (Completely Built Units) should not come down. If the CBU cars duty would come down then investment made by the Automobile sector in the country would surely reduce.

Mr. Jnaneswar Sen Senior Vice-President (Sales and Marketing) Honda Siel Cars India also agreed to the statement by Mr. Pawan Goenka and said that it will be contradictory to what the Indian government is doing till today.

This reduction in import duties would not only affect the investment in the country but would also affect the major aim of AMP 2016 of creating 25 million employment. The AMP 2016 which aims at revenue collection of USD 145 billion by 2016 for the Indian auto industry, accounting for 10 per cent of GDP and creating 25 million jobs would not be able to get completed.

The FTA (Free Trade Agreement) is going to be signed by the end of this year, the main aim of the EU to sign this agreement is to reduce the import duties on the luxury cars with 1,500 cc engine to 30% which currently is 60%.With this deal surely the Indian people would be benefited as the price of cars in India would come down due to the reduction in import duty from Europe.