Auto Sector Attractive Despite Handicaps: Ramaiah

The Indian automobile market offers ample opportunity for most companies despite handicaps like high customs duty and unavailability of unleaded petrol in many parts of the country, according to commerce minister B B Ramaiah.

Delivering the inaugural address at the India-European Union Automotive Forum in New Delhi yesterday, Ramaiah dwelt on the role of the automobile industry and the potential of the auto component sector.

This industry not only enhances the economic activity in the country but also leads to enormous spin-off effects on services, supplies, roads and infrastructure, said the minister. He said the government, in its effort to improve the infrastructure, had opened up the ports and roads sectors for foreign investments and invited European business leaders to take part in these critical areas.

 

Ramaiah urged the domestic industry to acquire the best of technology from its European counterpart. He made a special mention of the problem of spurious automotive components, and called for strong measures to check their proliferation.

Association of Indian Automobile Manufacturers (AIAM) president Brijmohan Lall commended the commerce minister for taking steps to liberalise imports further.

Lall said the critical issues facing vehicle manufactures were technology, vehicular emission, safety and better air quality. Manufacturers were trying to make vehicles safer and bring down the emission level, he added.

European Commission ambassador and head of its delegation M B McGeever welcomed the economic reforms. EU has now become the largest trading partner of India, as 27 per cent of Indian exports go to EU, while 30 per cent of Indian imports are from EU, he said.

At a seminar held later in the day on foreign investment in the Indian automobile industry, European Automobile Manufacturers Association director (trade & economics) Heinz Handtrack said the demand is booming and the annual growth rate of about 25 per cent is likely to continue. However, he said the high customs duty had been impeding trade.

European Association of Automotive Suppliers (Clepa) manager (international trade) Bernard Flately said: Clepa, apart from Europe, is already a part of India.

Premier Automobile Ltd vice-president (corporate affairs) and AIAM executive committee member Ramesh Adige said the automobile industry plays an important role in revenue generation. In 1995-96, the contribution of the automobile and auto-related industries to the exchequer was Rs 24,000 crore, he said. He however warned that brakes could be put on the growth of the industry because of inadequate and poorly maintained roads network.