Sensitive items may be moved out of auto FTAs
Taking up cudgels on behalf of the automotive industry, the department of industry has suggested that sensitive items identified by the industry should be excluded from the free trade agreements (FTAs) being negotiated by India with Asean, Thailan...
By TNN |
NEW DELHI: Taking up cudgels on behalf of the automotive industry, the department of industry has suggested that sensitive items identified by the industry should be excluded from the free trade agreements (FTAs) being negotiated by India with Asean, Thailand, Korea and Bimstec countries.
Manufacturers’ associations — Society of Indian Automobiles Manufacturers (SIAM) and Automotive Component Manufacturers Association of India (ACMA) — have come up with a list of 76 items out of more than 165 manufactured by the industry for inclusion in the negative list for the FTAs being planned.
In the working group report on the auto sector for the Eleventh Five Year Plan, the industry department pointed out that there were serious reservations about preferential rules of origin (ROO) being incorporated in the FTAs. Since the main objective of the ROO is to prevent trade deflection or pass through, the report said that such rules should be strict.
The industry is apprehensive that if the ROO is lax, then third country goods could flow into the markets of partner countries on preferential terms. The report suggested that in the ROO for the FTAs, the need for value-addition should be at least 50% and there should be change of custom tariff classification at a 4 digit level.
It added that processes like packaging, re-packaging, polishing, finishing, mere assembly or disassembly, inspection, internal transport, freight, anti-rust applications and oiling should not classify as value addition activities.
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India has already finalised the ROO with Asean countries (grouping of ten South East Asian countries) at more liberal terms than those suggested by the industry department. Thailand and Bimstec countries, too, are demanding that the ROO for their FTAs with India should be liberal. Justifying the need for additional protection for the automotive industry, the working group report stated that the industry faced significant competitive disadvantages vis-a-vis the South East Asian countries. It added that the list of sensitive products identified by the industry have also been marked sensitive by Unctad.
Gunjan Pradhan Sinha & Amiti Sen
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