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The government is considering an increase in duties on import of auto components. (Photo: Bloomberg)
The government is considering an increase in duties on import of auto components. (Photo: Bloomberg)

Govt asks auto industry to cut imports, raise exports

Centre will support in increasing production, boosting employment, says Nitin Gadkari

MUMBAI/NEW DELHI : Senior ministers of the Union government took Prime Minister Narendra Modi’s clarion call of Atmanirbhar Bharat forward and urged automakers to reduce their dependence on imports, increase exports, and make India a global manufacturing hub for automobiles and auto components.

“I request the auto industry to not depend on imports, develop import substitutes, and expand its export business. The government will support you in increasing production and boosting employment potential," said Nitin Gadkari, the Union minister for road transport and highways, and micro, small and medium enterprises.

Minister of railways, and commerce and industry Piyush Goyal and minister of environment, forest and climate change Prakash Javadekar also urged the auto sector to boost local manufacturing at the annual conventions organized by the Society of Indian Automobile Manufacturers (Siam) and the Automotive Component Manufacturers Association of India (ACMA), held on 4-5 September.

This is also likely to boost the economy by creating enormous job opportunities at a time that the country is struggling to shake off the adverse effect of the lockdown imposed to check the spread of coronavirus.

Gadkari urged the industry to develop import substitutes and increase investment in research and development (R&D) and export volumes and said that the government will set up industrial clusters along the 12-lane, 1,400km Mumbai-Delhi expressway. “The expressway passes through the backward tribal areas of Haryana, Rajasthan, Gujarat, Madhya Pradesh, and Maharashtra. Land acquisition cost in these areas is low. The land rate in Gurugram or any big city is 2-2.5 crore per acre. I am willing to give you land in these areas for 10-15 lakh per acre. I request the auto industry to develop industrial clusters on the land parcels," the road transport and highways minister said. Gadkari said his ministry will take the responsibility for connectivity to ports, railway stations and airports.

Citing examples of existing auto hubs, such as Sanand, Manesar, and Hosur, Goyal said India must look at boosting its domestic capabilities and expand its global economic engagement.

“The auto industry should reduce dependence on imports, specifically in areas such as steel, tyres, and electronic parts," Goyal said.

Goyal said he has requested the industry to come up with a viable model for setting up semiconductor fabrication units, which will help increase production of electronic components.

“India needs to focus immediately on setting up fabrication facilities because that is the root of the entire electronics chain. The government is willing to extend support to set these up," Goyal said. One or more large automakers may look at setting up such units, and even consider moving existing fabrication units from other countries to India, he said. “I think it should be driven by the private sector and the government setting up a fabrication unit is not a good idea." Goyal said. The industry must aim to become a global manufacturing hub for sunrise sectors, including electric and autonomous vehicles.

The government is working with other countries to sort out tariff and non-tariff barriers, including a free trade agreement with the European Union for India to become a preferred supplier. “We are also considering a credit guarantee model to help exporters. Under the model they may get insurance of up to 90% of their export value. The scheme should be finalized soon," Goyal said.

Gadkari and Goyal also hinted that the government is considering an increase in duties on import of auto components. Javadekar said that the government was evaluating the possibility of reducing goods and services tax for two- and three-wheelers to revive local demand, while Gadkari said that the much awaited vehicle scrappage policy is in its final stages of approval and will be rolled out within a month.

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