Govt asks industry to be ready for used car imports
June, 02nd 2008
Despite taking a tough stand against liberalising the trade of re-manufactured goods at the World Trade Organisation (WTO), the government has begun to nudge Indian industry to reconsider its opposition to such imports.
Indian industry believes that re-manufactured goods are cheap second-hand goods in the garb of a respectable name and has for long opposed their import on the grounds that they will decimate domestic manufacturing.
"The recent inclusion of re-manufactured goods in the Non-Agricultural Market Access (Nama) talks has been done to please some major developed countries. We are going to oppose it. But Indian industry should think about market access in re-manufactured goods," said a government official.
Four months ago, at a consultation organised by the Federation of Indian Chambers of Commerce & Industry, Rahul Khullar, additional secretary in the ministry of commerce & industry and India's chief negotiator at the WTO, had said industry would have to ask itself whether India would have an export interest in such goods.
The re-manufacturing industry in the US is worth $4 billion to $5 billion and these units are eligible for local tax benefits given under the guise of sustainable manufacturing.
Afghanistan, Australia, New Zealand, Fiji and Sri Lanka have already opened up to remanufactured automobiles.
In India, the Society of Indian Automobile Manufacturers (SIAM) and the Auto Component Manufacturers Association (ACMA) are unified in their opposition.
"Permitting re-manufactured auto components into India could hasten the demise of the nascent Indian automotive industry," said Dilip Chenoy, SIAM's director-general.
In Japan, the pollution tax on passenger cars older than three years is prohibitively high.
"By exporting these cars under the guise of re-manufactured vehicles at attractive prices to developing economies like Sri Lanka, where environmental standards aren't as stringent, Japan has transferred the cost of pollution to another country. India shouldn't be the next victim," said an expert opposing the Nama draft.
Advocates of re-manufactured goods, however, argue that these are as good as new and can be had for half the price of new ones.
"Bringing back a used component to its original performance standard could be defined as re-manufacturing," said Subbaraman Ramkrishna, executive-director, Caterpillar India, which is a subsidiary of the world's largest manufacturer of construction equipment.