NEWS

Auto companies ask government to ink FTAs with South and Central America, Africa and Middle East

Tuesday, Nov 18, 2014

Domestic carmakers are pressing for free trade agreements (FTAs) with developing nations to shore up exports, which have sagged due to sluggish demand in Europe, one of the main markets for small cars made in the country.

India is the world's largest exporter of compact cars, but sluggish global markets have pulled down car shipments by 7 per cent in the first seven months of the fiscal from a year ago to 312,000 units, ringing alarm bells for the industry that has been a major source of foreign exchange for the country.

In a bid to ramp up demand, the Society of Indian Automobile Manufacturers (SIAM), an apex body of 49 auto manufacturers, has asked the government to enter into FTAs with emerging nations, including those in South and Central America, Africa and the Middle East, where there is growth potential. It has also initiated talks with the government for a policy that focuses on increasing auto exports and aligns with the 'make in India' campaign.

"There has been a deep concern on falling exports and we are working with the government, seeking their help to enter new geographies. We have submitted a detailed report to the ministry of commerce, informing them about the regions with potential and asked them to make ways to possibly craft FTAs to boost demand for 'Made in India' cars," SIAM deputy director-general Sugato Sen said.

The industry is seeking incentives for the sector in the country's export-import policy, which is being framed. Also, in a response submitted to the commerce ministry, SIAM has identified some 20 high-potential export markets, including Colombia, Chile, Peru, Nigeria and South Africa, which have seen a surge in demand for Indian cars. As per SIAM data, Africa is the largest consolidated market for Indian cars, accounting for about a third of the around 500,000 cars exported in 2013-14.

Indian auto companies are simultaneously also vying for new markets to increase exports. The country's largest car exporter, Hyundai Motors, which manufactures several variants at its twin Chennai plants to meet export demand from over 100 counties, has sharpened focus on countries like Algeria, South Africa, Indonesia, Myanmar and Australia.

"We have consistently maintained the highest car exporter tag from India by producing cars of global standards. With the stagnation in Europe, once the largest market for car exports, we have identified new markets to sell our cars and are entering new territories to expand our reach," said Rakesh Srivastava, senior vice-president (marketing & sales) for Hyundai Motor India.

Europe, the largest export market for Indian cars, has not been doing well for the past few years. Major Indian carmakers like Maruti Suzuki, Nissan, Volkswagen and Toyota are now focusing on emerging markets like Peru and Ecuador in South America; Guatemala, Honduras, El Salvador and Nicaragua in Central America; Kenya, Tanzania and Uganda in East Africa; Burkina Faso, Ivory Coast, Congo and Angola in West Africa and Turkey and Egypt in West Asia.

Total exports of passenger vehicles (PVs) — including cars, utility vehicles and vans — also declined in the April-October period. It was down 0.06 per cent from the year-ago period to 356,300 units.

 

Source : http://economictimes.indiatimes.com/