New auto policy with easier FDI norms on the anvil
New Delhi: The government is giving the final touches to the new automobile policy which would envisage a further liberalisation of the investment norms and may put a brake on the runaway imports of second-hand cars next year.

Based on a series of meetings with industry representatives, the ministry of heavy industry and public enterprises, is to put out the policy which may see a relaxation in the 70 per cent localisation criterion that auto companies setting up shop in India have been forced to follow. Further, the investment norms is likely to see a dilution on the condition that foreign direct investment in automobiles have a $50m capitalisation norm over five years. The government had already eased the export norms for auto companies by allowing the companies to export components as part of their export obligations, instead of exporting fully built vehicles.

To protect the domestic auto industry, the government is also likely to impose a 40 per cent countervailing duty on the imports of second-hand cars next year, when the quantitative restrictions are removed, besides setting a ceiling on the number of cars that can be imported.
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