New Delhi, Aug 25: A key parliamentary body has asked the government to realign its automobile policy orientation, to work within guidelines of the World Trade Organisation (WTO) and yet become growth-oriented. The auto policy should ensure that Indian auto industry becomes globally competitive in terms of scale, technology and quality, it said. The WTO regime is pushing for an intervention-free economic system where market efficiency will hold the key to survival of enterprises.

Neither localisation nor compulsory export commitments are permissible under the WTO regime, said the latest report of parliamentary standing committee related to the ministry of heavy industries and public enterprises. In the post-WTO environment, the government's ability to make policy will be constrained.
Thus a new policy can have a combination of government support in areas of tariff barrier and subsidies to research and development activities, the report said adding a structural adjustment of taxation, improvement in road infrastructure, labour laws besides inspection and certification norms will allow the Indian auto industry to achieve global competitiveness in post-WTO scenario.

At the same time, custom duty structure should be developed into a long-term stable system with used vehicles attracting maximum duty and components alongwith raw materials being imposed minimum duty.

The government should renegotiate existing provision of the WTO agreement on the issue of second-hand vehicle imports, failing which creative restrictions should be resorted to. Bureau Report