The world’s largest carmaker, Toyota, has said it would be unfair to Japanese carmakers in India, who have invested more and for a longer time, if Europe-made cars get import-duty incentives under the Indo -European Union Free Trade Agreement.
Unlike the Indo-Korean and Indo-Japan FTAs, where automobiles were strictly kept out of negotiations, import duties on cars figures in the FTA negotiations with Europe, which has been pressing for a duty cut.
Toyota said the government should maintain a level playing; if there is to be any relaxation in duties, it should be applicable to all companies.
“I dont think the government can take one decision on Japan and another one on Europe,” said Hiroshi Nakagawa, managing director, Toyota Kirloskar Motor Ltd. “I know cars is part of the ongoing negotiations (Indo-EU FTA), but if something happens it should be for the entire industry. It should be fair to all.”
Japanese carmakers led by Suzuki account for almost 52% of the domestic passenger vehicle market. The Europeans have been latecomers and account for a mere 4% of the market. If import of bigger cars from Europe is incentivised, Japanese cars could be impacted.
Even heavy industry minister Praful Patel has written to prime minister Manmohan Singh and commerce minister Anand Sharma, warning that such a reduction would give unfair advantage to the European car industry.
An internal report of the European Commission has also said the pact could hit India’s car industry to the tune of as much as $1.3 billion (Rs6,000 crore).