Mercedes contradicts SIAM's stand on India-EU FTA

Taking an opposite stand from the automobile industry body SIAM, luxury car maker Mercedes Benz India today favoured the proposed free-trade agreement with the European union, saying protectionism will not make the sector competitive.

The wholly-owned subsidiary of the German auto giant said that despite being a member of Society of Indian Automobile Manufacturers, it does not agree with the industry body's view on the proposed free trade pact between India and the EU.

Both the sides are negotiating the pact since June 2007. The EU is pressing hard for significant cut in duties on automobiles, a demand which has been strongly opposed by the domestic auto industry.

Mercedes Benz India Managing Director and CEO Eberhard H Kern told PTI that tariffs on parts and components would go down if the negotiation happens successfully.

"We are the members of SIAM, and on this point we do not agree with them on the same position. That's normal... We believe in open market. We trust both sides (EU and India) that they negotiate a solution which could be finally acceptable," said Kern on the sidelines of a function here.

He further said: "If you protect your industry, they would never compete internationally. Therefore, it should be in India's interest to open the market."

Mercedes Benz India, which is investing Rs 850 crore by 2014 to double the capacity at its Pune-based plant to assemble more models, is hoping high on the agreement to avail tariff benefits on components.

"I believe and I hope that there would be an agreement. We focus on our local production... Therefore, from my point it's more important as tariffs on parts and components would go down.

"We trust into the two governments and the two side that they come to a good solution. We believe that the solution they find will have time-frame," said Kern.

Talking about the recent hike in duties on imported luxury cars and sports utility vehicles, he said the increase on the taxes and rising inflation would not affect the sales of the company.

Mercedes Benz India, which has plans to enhance its dealership network this year in India by opening 10 new showrooms, today inaugurated its new outlet in Noida.

The company has opened its fifth dealership in Kolkata recently and has plans to add showrooms at Bhubaneswar in Orissa and Rajkot in Gujarat.