In a veiled warning to the domestic auto sector, the Commerce Ministry today said it cannot continue providing protection to the industry while duty barriers are coming down all over the world.
"...We have to look at to what extent the present tariff protection to the auto sector is sustainable...We will have to question ourselves on the sustainability of a long-term tariff protection plan particularly in an environment where every country is bringing down tariffs," Commerce Secretary Rajeev Kher said here.
He was speaking at the Society of Indian Automobile Manufacturers (SIAM) annual convention.
India is protecting the domestic auto industry from overseas competition while signing free trade agreements with different nations and groups.
Kher said while negotiating trade agreements one has to keep in mind the overall interest of different sectors.
"We have consciously over the last several years by creating a tariff protection have nurtured the industry and I think the point has come when the automotive plan needs to look at to what extent we want to continue with that and how do we want to bring it down to some kind of global at par," he said.
The negotiations for a free trade agreement between India and the 27-nation European Union got stuck mainly because of duty reduction in the auto sector. EU demanded significant duty cut in the sector.
"When we look for a preferential trade relation, we clearly can't have a win-win all in our account...Do not look for a relationship in a trade agreement where it will be one way flow," Kher said.
However, he assured the industry that the ministry would announce incentives to boost exports.
"In the foreign trade policy (FTP), the auto sector will receive export incentives. The assurance I want to give you is that the sector will remain a beneficiary of the incentive programme under the FTP," he said.
The FTP is expected to be announced early next month.
