In a strongly-worded message, Commerce and Industry Minister Piyush Goyal on Tuesday suggested the auto industry not to import components unnecessarily if the exporting country is not giving equal access to Indian players. He however said that companies can import quality products if those are not available or manufactured domestically.
“Where things are being unnecessarily imported without India getting an equal opportunity in those countries I would be tempted….,” he said here at the annual convention of the Society of Indian Automobile Manufacturers.
He did not elaborate on these remarks.
Goyal also said that the government may have to look at the practices of some of the players in the sector who gdictated by their parent companies on sourcing and pricing of imports of components.
He added that there are certain companies who by choice prefer to import and there are certain firms who may not by themselves be importing and on record showing a greater degree of indigenisation.
“But the moment, we go down one or two levels into their supply chain, we find them still dependent on imports. Often being dictated by their parent company from where these component suppliers would source, the pricing at which it will be sourced.
“I do not know how legal that is. But I personally think there is a question mark on transfer pricing in that, there is a question mark on fairplay… I would urge all the players of the auto industry to introspect on it. I personally believe that at some point the government may also have to get into greater detail on this subject,” he added.
The minister also said that the government may have to take retaliatory action against countries that do not allow access to Indian steel companies but are permitted to send the metal to India.
Goyal was referring to some companies importing automotive steel from their parent country.
The auto industry is still dependent for 20% of its requirement on imports and this dependence varies across companies which shows that some of them are importing by choice..
Further, the minister dismissed the contention of some of the global auto firms which say that they bring investments into India.
“Investments come to India because of its market size,” he said adding bringing investments into India does not mean that “we would have to continue to import goods into India that are available locally at a competitive price and of very high quality.
He also slammed the practice of some companies who route their investments from one geography and import components and inputs from third countries that are “not very” friendly to India.
He said India may also have to look at products coming from other countries at zero duty under the free trade agreement more carefully to see whether there is a level playing field between Indian suppliers and the countries from which their products are coming.
“Non-tariff barriers created by some countries, written or unwritten, by which they get together not to allow goods from other countries those are areas of concern,” the minister added.
Goyal added that the industry should trust the domestic ecosystem and ” I am not against imports per se”.
He said that his ministry is bringing quality control norms for different products.
He also suggested increasing R&D and design capabilities.
“We are also concerned about the skilling, upskilling and re-training of our workforce,” the minister said urging the industry to work on this.
