Trends: India continues to be a net importer of automotive sector

FICCI suggests steps to revive auto growth

FICCI has suggested measures to revive growth in Indian automotive sector and double its contribution to GDP from the existing 5 per cent to 10 per cent.

In a study on Automotive Policies and Incentives in Developing Countries, FICCI pointed out that India remains a small player in the world automotive market with a share of around 3 per cent in world production of passenger cars and commercial vehicles (compared with 12 per cent for China) and a share of 0.6 per cent in world automotive exports.

The study noted that several developing countries such as Thailand, Brazil, South Africa, China and Malaysia were providing liberal assistance and incentives to their automobile sector to attract foreign investment and to develop domestic manufacturing capacity in automotive sector.

It further said that these benefits need to be complemented by appropriate tariff policy to safeguard the domestic auto industry from surge in imports and to develop adequate indigenous manufacturing base.

In this context, FICCI study pointed out the implications of the proposed anti-concentration principles in WTO NAMA negotiations and proliferation of FTAs that could significantly impact the Indian automotive sector.

Today, India is the eighth largest manufacturer of commercial vehicles and ninth largest manufacturer of cars, pointed out FICCI. Whereas, China is the second largest manufacturer of cars and commercial vehicles; Brazil is the seventh largest manufacturer of cars and Thailand is fifth largest manufacturer of commercial vehicles.

The study noted that India continues to be a net importer of automotive items with a trade deficit of over $4 billion in 2005-06 and 2006-07. In 2007-08, the deficit has come down but India continues to be a net importer of these items.

Elaborating the measurers required, FICCI said that Government could consider providing income-tax holidays, industrial adjustment fund, import duty concessions on machinery, incentivising eco-cars, setting up technology acquisition fund, dedicated infrastructure for auto sector, export market development assistance.

February 4, 2009
Source:Sify
URL: http://sify.com/finance/fullstory.php?id=14850719