Auto Part Makers Seek Reliefs To Meet Export Commitments

A delegation from the Automotive Component Manufacturers Association of India (Acma) yesterday asked industry minister Murosali Maran to allow car makers to offset their export commitments, as outlined in their memorandum of understanding (MoU) with the government, against any exports they undertake by buying components from domestic manufacturers.

This has been proposed by Acma to boost the export performance of the domestic auto-ancillary sector as well as a possible solution to the problem faced by the car manufacturers in meeting export commitments.

The Acma team urged the government to lay down policy guidelines which would have greater stress on indigenisation of the car industry and phase out dependence on kit imports.

 

Industry ministry sources, however, pointed out that the government, while monitoring the automobile industry, was more keen to leave the growth path to the market forces and, contrary to reports, was in no hurry to slap penalties on car companies for failing to meet indigenisation and export commitments in the initial years.

These were two key suggestions made by the Acma team in its meeting with Maran yesterday. The meeting was called by the minister himself to discuss the ills plaguing the industry and to find out ways and means of pushing up the rates of growth.

This was the third in the series of sectoral meetings initiated by Maran recently. The minister has already held the first of these sessions with representatives of the domestic paper industry on Wednesday and with the textile machinery delegation on Thursday. While noting the suggestion made by Acma on encouraging car companies to buy from the domestic component industry to meet export requirements, Maran asked the association to prepare a detailed roadmap, on a priority basis, for the domestic industry to boost component exports from the current $270-280 million level to $1 billion mark in five years.

The industry minister at the meeting expressed concern at the slackening in the growth rate of the automobile vehicle sector which would, in turn, fuel growth in the component sector.

Acma stressed upon the minister the importance of having a broadbased automotive policy, encompassing the various tiers of the sector from the frontline players like the car-makers to the various ancillary players.

The delegation emphasised the importance of milestones like Vision 2000, Vision 2005 and Vision 2010 in any such policy, and agreed upon the necessity to involve the vehicle manufacturers in future discussions.

Another key hurdle pointed out by the delegation was the menace of spurious components. Unfortunately, spurious products comprise nearly 40 per cent of the domestic component market, said Acma president K Mahesh, who led the delegation.

It suggested two measures to tackle this problem; One, to make it a cognisable offence and second, to reduce excise duties on components from the existing 10-18 per cent to 5-10 per cent. Ministry sources said steps to amend the law to make manufacturing of spurious parts a legal offence is in progress.