Keep auto components out of RCEP, prevent back door entry of China: ACMA

Auto components industry body ACMA said on Wednesday that government must keep automobiles parts out of the proposed free trade pact RCEP, saying it could lead to back-door entry of China, the single largest country from where India currently imports such items.

The Automotive Component Manufacturing Association of India (ACMA) said despite no original equipment manufacturer from China present here imports of auto parts from the country stood at $4.6 billion in 2018-19, accounting for 27 per cent of India's automotive parts imports.

"Our concern with RCEP (Regional Comprehensive Economic Partnership) is that it has the ASEAN countries along with China, Australia and New Zealand. It should not allow a back-door entry route for China," ACMA Director General Vinnie Mehta told reporters here.

He pointed out that among the top 10 countries of origin of imports, China was the first with 27 per cent followed by Germany with 14 per cent, South Korea at 10 per cent, Japan at 9 per cent and the US at 7 per cent making up the top five.

"While it is understandable about the quantum of imports from Germany, South Korea, Japan and US as we have original equipment manufacturers (OEM) from those countries, but there is none from China," Mehta added.

He said most of the parts imported from China are in the aftermarket segment where standards are not fully complied with.

India's components exports to China in 2018-19 stood at $300 million.

Expressing concern over the likelihood of further increase in imports from China, he said,"We have asked the government to keep the automobile industry out of RCEP or at least keep it in the negative list."

Mehta pointed out that overall component imports from Asia also continued to rise for a second year in row with the Asian markets accounting for 61 per cent of total imports.

Even with Japan and Korea, he said there is a trade imbalance which is heavily unfavourable to India due to cultural reasons and not necessarily due to the lack of competence of the Indian parts suppliers.

Stressing that the Free Trade Agreements (FTAs) have not helped the auto components industry, Mehta said India is a net importer of automobile parts with exports at $15.16 billion last fiscal while the imports were at $17.6 billion.

According to ACMA, imports grew by 14.4 per cent last fiscal from $15.9 billion in 2017-18.

"Our appeal to the government has been to sign FTAs where we can also benefit with countries which have similar markets like ours such as South Africa and Brazil, among others.