Maruti Suzuki is opposing the free trade agreement between India and the Europe Union. According to Rahul Bharti, Maruti Suzuki Head, the Indian government should deny the proposal of free trade for high value products like cars between the two nations, as the move, when implemented could impact job creation, economy and capability in the country. He believes that the trade policy should encourage local investments instead of imports.
India and the European Union are in talks for the free trade agreement since June 2007, but the authorities have not yet finalized a proper decision because of several issues rising against the proposal. The two nations have been negotiating a Broad-based Trade and Investment Agreement (BTIA), which will eliminate duties on over 90 percent of the goods traded between the countries. The European Union is demanding considerable duty cut in automobile sector, which was strongly opposed by domestic auto industry body SIAM.
Implementing the free trade agreement would be good news for Indian buyers as the automobiles imported directly will have a price cut of around 35 to 40 percent. The big picture of the India-EU FTA suggests that the agreement will discourage future investments in the country, which will hinder local manufacturing and value addition. The process of imports without any local production will further lead to loss of jobs in India. Apart from that, the non-EU manufacturers will be at a disadvantage, where their European rivals will enjoy duty cuts and big volumes.
If the free trade agreement goes through, Maruti Suzuki will be at loss as Fiat, Volkswagen and Skoda will be able to import CBU cars for considerably cheaper amounts, which will directly impact the India’s biggest car manufacturer.
Source – Economic Times
