SIAM says no to import duty cut in EU FTA; Volkswagen in favour

New Delhi: With steps being taken up to resume India-EU FTA talks, automobile industry body SIAM Tuesday asked the government not to give in to the 28-nation bloc's demand to reduce import duties on fully-imported cars, even as German car maker Volkswagen came out in favour of such a cut.

In a departure from past process, Commerce Secretary Rita Teaotia had sought opinion from individual companies, including BMW, Mercedes, Volkswagen, Maruti Suzuki, Hyundai, Tata Motors and Mahindra & Mahindra apart from meeting officials of industry bodies SIAM and ACMA.

Earlier only a collective view of the industry was sought from SIAM and ACMA.

Teaotia will be leaving for Brussels to meet her European counterpart on February 22 to review the stalled negotiations.

"We met Commerce Secretary as she wanted to understand the issues of automobile sector. We put forth our demand of non-inclusion of CBU imports in the talks," SIAM Deputy Director General Sugato Sen told PTI.

SIAM has been maintaining that the reduction of customs duties on imported cars run against the spirit of 'Make in India' as it will hurt investment in the automobile sector, which is among the biggest contributor to India's manufacturing sector.

When contacted, a Tata Motors spokesperson confirmed company representatives participating in the meeting and said: "We are in line with SIAM views."

A Volkswagen India representative also confirmed that the company was invited for the meeting but could not attend due to prior commitments with Make in India week celebrations in Mumbai.

"We are in favour of India-EU FTA as it will result in inflow of new technologies and will sharpen competitiveness of the Indian automotive industry. The import duty reduction will be only on high-end luxury cars and not on mass segment cars," a Volkswagen Group India spokesperson said.

A Maruti Suzuki India spokesperson declined to comment.

The purpose of the meeting in Brussels later this month is to assess where both sides stand and how India and the EU should go forward with the proposed pact, officially dubbed as Bilateral Trade and Investment Agreement.

The last round of trade talks between the two sides happened in May 2013. In that meeting India and the 28-nation bloc failed to bridge substantial gaps on crucial issues, including data security status for the IT sector.

Besides demanding significant duty cuts in automobiles, EU wants tax reduction on wines and spirits and dairy products and a strong intellectual property regime.

The free trade pact is aimed at reducing or significantly eliminating tariffs on goods, facilitating trade in services and boosting investments between the two sides.

The two-way commerce in goods between India and the EU was USD 98.5 billion in 2014-15.