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The Free Trade Pact with EU Disturbs Auto industry

May 08 2012

Almost all automobile corporations based in India, regardless of whether home grown or foreign based brands at present in India are busy pitting against the necessities on their industry in the proposed India-European Union free trade agreement (FTA). According to SIAM (The Society of Indian Automobile Manufacturers), the proposals might wipe out investment policies for the future, thereby completely upsetting the smooth running businesses.

Popular companies including Mahindra & Mahindra, Tata Motors, Maruti Suzuki, Toyota Kirloskar, General Motors, Honda Siel among others have stated their apprehensions and concerns over the anticipated agreement that proposes to cut duties allotted on vehicles imported to India straight from the EU. Presently, these vehicles along with other similar vehicles would cost almost twice as much as in their native marketplaces soon after addition of several other duties. The reduction of price in case, the provisions that come into force perhaps be more than half.

The import duty on vehicles across India at present; stands at 60 per cent. On the other hand, the duty imposed on EU ranges between 6.5 and 10 per cent. India shifted about 230,000 vehicles to the EU in the year 2011. Alternatively, the EU exported 6,000 vehicles.

Managing director of Tata Motors (India operations), Mr. Prakash M Telang has stated that investments were established as stated by the rules and as indicated by the government. He also stated that the Indian citizens have seen many manufacturers from various parts of the world visiting the country. Car manufacturers in India also followed the same trend and made significant investments consequently. Telang also added that in case, the interpretation was to shift policy, it would be considered as unfair to all the players in the industry for the reason that it would work up for an unlevelled playing field. He also affirmed that the industry players might see investments going away from the country which does not seem to be quite good a move.

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