The Society of Indian Automobile Manufacturers has urged the Centre not to reduce Customs duty for fully built vehicles under the India–EU free trade agreement.

SIAM is concerned that increased lobbying and pressure by European nations may cause this to happen. While this will slow down investments and hit employment in the Indian auto sector, the bigger worry is that it will become the norm for other bilateral trade agreements.

“SIAM welcomes investments in India as we have no restrictions in the sector. We are against free imports of completely built units as they do not create employment and investment. Also, if you do this for one FTA, you will open the floodgates for all others,” said Dr Pawan Goenka, SIAM President.

The auto industry is also worried that the relatively low scale of operations for local industry may just worsen. Only the likes of Maruti Suzuki, Tata Motors and Hyundai have large capacities.

“We support FTAs and with India being committed to the WTO, we feel it should happen with many countries. However, the industry's concerns are vital. Till now, the Commerce Ministry has kept these in mind, especially in the FTAs with Japan and Korea,” Dr Goenka said.

The India-EU FTA opened for talks in June 2007. According to reports, the Commerce Ministry expects talks to conclude by March-April after which it will open the FTA for legal vetting. In similar pacts to date, sensitive sectors like auto have been protected by putting them in the negative list (no duty cuts). This was the case for vehicle imports in recently signed India-Japan FTA though (import of) components were eased

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