With just about a week left for the final contours of the Indo-EU free trade agreement (FTA) to emerge, the auto industry has stepped up its lobbying efforts against the likely benefits proposed for European carmakers.
The Society of Indian Automobile Manufacturers (SIAM) has said that ongoing investments in the domestic car industry and its export potential will be severely impacted under the trade pact, even as India may not gain much in other areas such as agriculture and services.
It is believed that fully-built car imports from European countries could see half of the 60 per cent basic customs duty waived off, especially for large and premium vehicles. A ‘tariff quota' may also be extended to certain European countries.
“This FTA is being done with minimum consultation with industry and no debate has taken place in the media or in Parliament on this subject. The entire regime is forced on the people of India without any sectoral cost-benefit analysis. It is also believed that the pressure to sign an agreement is politically motivated and not driven by economic logic,” SIAM argued in a letter.
The Prime Minister is expected to take a final view at a meeting with other senior Ministers on February 6.
“In agriculture we do not have capacity to export even if we gain market access since we are not able to feed our own people and facing a runaway food inflation situation. Negotiators have been saying that India will gain huge market access in services, but are we capable of providing huge amount of services to EU, which is a conglomerate of mostly non-English speaking nations?” it said.
Besides, it pointed out that the European standards on food imports and other consumables are so stringent that India may find it tough to meet these measures.
“Already the Japanese and Korean companies, which are the largest exporters of cars (from India), are protesting about tariff reduction under the FTA,” SIAM said.
A “political intent” on the FTA or broad-based trade and investment agreement is likely during the India-EU summit in the Capital on February 10, with the final pact expected to be inked by the year-end.
“We do hope that it will be possible for the highest level to have an outline of what the Agreement will look like. If this happens then we can look forward to actually signing the agreement sometime six months or so after that,” the newly-appointed Ambassador of the European Union to India, Dr João Cravinho, told Business Line recently.