India likely to ride European wheels to avoid tariff cut collision
Cos such as Fiat, Volvo and Volkswagen that have set up manufacturing plants in India could help India get a better deal at the WTO. BMW's 2009 7-series | VW Jetta
By Amiti Sen, ET Bureau |
GENEVA: European automobile companies such as Fiat, Volvo and Volkswagen that have set up manufacturing plants in India could help India get a better deal in the negotiations on industrial products (Nama) at the World Trade Organisation.
India has written a letter to EU trade commissioner Peter Mandelson that the 25-nation bloc should not insist on limiting the country���s flexibilities in protecting its infant sectors from tariff cuts as European and US auto companies with manufacturing facilities in India want continued protection against imports.
The EU is supporting an ���anti-concentration��� clause, which finds mention in the draft Nama text being negotiated at the WTO. The clause says India and other developing countries, which have been allowed to exclude 5% of products from tariff cuts, cannot bunch them in one area.
In fact, the EU has gone a step ahead by demanding that at least 50-80% of items in a single tariff chapter have to be included in tariff cuts. This would mean India would not be able to protect from tariff cuts a majority of its automobile, textile and chemicals sector, even if it fell well within the range of 5% prescribed in the flexibilities offered to developing countries in the mandate of the Doha round.
India has written a letter to EU trade commissioner Peter Mandelson that the 25-nation bloc should not insist on limiting the country���s flexibilities in protecting its infant sectors from tariff cuts as European and US auto companies with manufacturing facilities in India want continued protection against imports.
The EU is supporting an ���anti-concentration��� clause, which finds mention in the draft Nama text being negotiated at the WTO. The clause says India and other developing countries, which have been allowed to exclude 5% of products from tariff cuts, cannot bunch them in one area.
In fact, the EU has gone a step ahead by demanding that at least 50-80% of items in a single tariff chapter have to be included in tariff cuts. This would mean India would not be able to protect from tariff cuts a majority of its automobile, textile and chemicals sector, even if it fell well within the range of 5% prescribed in the flexibilities offered to developing countries in the mandate of the Doha round.
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A government source told ET the EU did not realise the clause would hurt its own automobile companies which had set up operations in India. The real threat the companies would face if the high duties on the automobile and auto component sectors were reduced would be from China. ���The companies had set up shop in India only because there was a protection of high tariffs on auto products. These companies do not want that the protection should be taken away so soon,��� the source said.
The government has indicated the demand of the multinational auto companies in a letter to Mr Mandelson. ���Let us see how Mr Mandelson responds to this,��� the official added. Meanwhile, the Indian industry is also holding meetings with representatives of the US and EU industry here. Industry chamber CII has said it disagrees with the anti-concentration clause and the attempt to make sectoral tariff elimination on identified sectors mandatory. Ficci, too, reiterated its stand against the clause.
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