Auto cos may soon lose import tariff protection .

New Delhi, April 28 The Commerce Secretary, Dr Rahul Khullar, has warned the automobile and auto ancillary industry in India that it cannot continue to hide behind high import tariffs for long. This suggests that the sector should get ready for lower import duties.

The total import duty on Completely Built Units is around 106 per cent, while that on Completely Knocked-Down Units is 60 per cent on an average. Import duty on auto components ranges from 7.5 to 10 per cent. A reduction in import duties would benefit Japanese and European Union auto-makers the most. India is currently negotiating Free Trade Agreements with Japan and the European Union.

“How long are we going to carry on, in a core sector like auto, living behind very large protective tariff walls? Isn't it time that we woke up and said, ‘hey this industry better shape up, because if it does not, it will ship out',” Dr Khullar said. He said the Government was open to protecting the domestic auto sector in FTAs, but added that “unless you (the auto industry) colour this with a vision of where you are going to get 10 years from now, you are not going to make it. It is time to start identifying not what you are good at, but what you should be good at.”

Dr Khullar said the Government was considering the problems being faced by the auto export sector including the rupee appreciation, high steel prices and the need for a Technology Upgradation Fund. An Ernst & Young study said India's automotive exports should touch $35-42 billion by 2016.

Source : Business Line