Govt asks auto makers to reduce imports, boost exports
07 September 2020
The Modi government has exhorted automakers to reduce imports and increase domestic production in order to play a bigger role in the global supply chain, as part of its effort to make the country more self-reliant.
Addressing the annual convention of the Society of Indian Automobile Manufacturers (SIAM) today, union minister of commerce and industry and railways Piyush Goyal said India’s auto industry should strive for global dominance, in terms of both auto components and finished products.
“Reciprocity, high quality, affordability and good economies of scale will help us expand our global engagement, Goyal said, adding, “Design, packaging and brand building are three pre-requisites for us if we want to offer our products across the world.”
“India is willing to provide a very facilitated environment. We are engaged with many companies who are looking for more resilient value chains. We have to identify sectors where we have a comparative and competitive edge over other countries. I am sure we will become trusted, reliable partners where countries across the world can look at greater engagement with India,” he said.
Calling upon the automotive industry to work together in the spirit of partnership, he said, “Ours is a listening government, and we are delighted to be available to the auto industry to find solutions and work together in partnership to achieve a better future, increase localisation in India and harness export potential on fair terms. When a company works in India, they get a large Indian market.”
“We are improving the scale and quality of what we are producing and serving. With this, we are seeing how we can improve competitiveness to engage with the world,” he said.
The government, he said, is open to raising duties on auto imports in a phased manner in a bid to boost domestic production, even as the country's auto industry set a target to halve imports of components within five years.
Goyal said raising duties was "not a bad idea" to discourage automakers from importing car kits, comprised of partially or completely knocked down vehicles, and using India only as an assembly base to get market share.
"We may look at something like a phased manufacturing plan. I will be open to suggestions," he said.
As the country moves towards `Aatmanirbhar Bharat’ the automobile industry's role becomes more important, he said, adding that the government is willing to engage as often as required to find solutions for greater global engagement.
Goyal asked the automotive companies to reduce royalty payments to their principals, which, he said, would also help them to sail through the crisis easily. He said those automakers that hold a sizeable share of the country’s auto market also pay millions of dollars as royalty to their parent companies. Reduction in Royalty can help them reduce the cash outflow, bring down vehicle prices and help boost domestic sales.
On the issue of Quality Control Orders (QCO), Goyal said that these should not be seen as barriers. He said that it is high time India started looking at quality control and provided the world with high-quality products. “Once we get the quality consciousness in the country as a whole, we will transform India's future, and that is the effort we are taking. Quality is never expensive. It brings down the cost. Quality brings in a culture in the company which always brings in - more efficiency, better productivity, and makes cost reasonable. We need to bring in a culture of quality in the country, which has to be emulated by the customer. Only then will we become a global player,” he said.
Quoting Swami Vivekananda he said, "If the mind is intensely eager, everything can be accomplished - mountains can be crumbled into atom”, the minister said that he is glad that auto industry is looking at re-skilling and re-training workers to align them with current trends in manufacturing
Goyal said the auto industry has over the last many years overcome many difficult situations and emerged stronger. “Our auto industry over the last many years has overcome many difficult situations but has come out stronger because they had the will to achieve. Truly, the industry is our pride. I have no doubt that the resilience that the automobile industry has demonstrated itself to be over the last many years, will once again help the industry to emerge stronger from Covid crisis. I would like to congratulate the automobile manufacturer industry for their contributions towards the fight against Covid-19, where the people showed adaptability and innovation. Many repurposed units to even manufacture ventilators, rising to the occasion”, he added.
The minister said that to help the auto industry with affordable logistics option, Indian Railways is ready to reduce freight rate. Goyal said that the automakers should find out innovative finance options, which would attract the financiers to lend money, as well as attract the buyers. To help the auto sector, especially exporters, the government will be happy to come up with innovative credit guarantee schemes, he added.