Need to clamp down on auto component imports: Commerce & Industry Minister Piyush Goyal

While addressing the 63rd SIAM annual convention in New Delhi, Goyal said the automobile industry has made huge progress and become self-sufficient in a “big way”.

“We still have certain companies, who by choice, prefer to import. We still have certain companies who may not be themselves importing and show a greater degree of indigenisation on their records. But the moment we go down one or two levels into their supply chain, we'll find them still dependent on imports often dictated by the parent companies (as to) from where this component supplier will source, the pricing at which will be sourced,” stated Goyal, reported Moneycontrol.

According to the report, Goyal had said at the Asia Economic Dialogue, early this year, that two South Korean companies burdened India with millions of dollars in trade deficit by importing components like high-grade steel for their cars liberally from the country of origin.

Automakers, Hyundai and Kia, could do so as India has a Free Trade Agreement (FTA) with South Korea, the report said, quoting Goyal.

Reiterating his concern, Goyal added, “There is a question mark, on transfer pricing and whether you're getting a fair deal between two countries. And I would urge all the players of the auto industry to introspect on this. I personally believe at some point the government will also have to get into greater detail on this. It will be important for us also to know whether countries where Indian steel is not getting free access, or adequate market opportunities should be permitted to send steel into India, it's possible the government may have to take retaliatory action if we find that there are no equal opportunities on both sides.”

Goyal argued that components available in India are not only competitively priced but also of very high quality.

He said sometimes countries imported items from a non-friendly country as their suppliers are located there.

This meant that though the investment is coming from Country X, it prefers to import from another country and not even its own country of origin.

This does not help India in job creation, though such companies are enjoying a huge market share in India, he underscored.

So, I would rather have a company get a larger market share in India, who's also helping create jobs in India, helping create economic activity,” he said, according to Moneycontrol.

Goyal, however, said that the government is not against imports if the required component is not available in India.

But he will be tempted to take stringent measures against companies that are not giving an equal opportunity to India, according to the report.