Japanese automakers want India to provide concessions like the ones it is preparing to offer European companies.
Companies including Honda, Toyota and Maruti Suzuki – which control more than half of the Indian market – are calling for a level playing field as the Indian government proposes to cut duties on cars under its free trade agreement (FTA) with the EU.
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Toyota India’s managing director Hiroshi Nakagawa told the Economic Times, “We should get a level playing field. A similar clause should be included in the Indo-Japan FTA to accord equal opportunity to all companies.”
Nakagawa pointed out that Japanese firms would be at a disadvantage if India provided selective concessions to EU companies.
Honda Car India’s senior VP marketing and sales, Jnaneshwar Sen, said: “There must be fair market conditions and level playing field… If the government decides to lower duty on car imports from Europe, the same should be extended to Japanese carmakers.”
A Comprehensive Economic Partnership Agreement (CEPA) between Japan and India became effective in August 2011. Duties on diesel engines imported into India are to be reduced from 12.5% to 5% over six years while tariffs on gearboxes are to be gradually reduced from 12.5% to 6.25% over eight years. Passenger vehicles and two-wheelers (CBUs) are not included in the concessions. Japanese auto executives want similar concessions to be incorporated in the FTA with their country.
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By GlobalDataMaruti Suzuki’s chairman RC Bhargava said: “From what I have read in the newspapers, the import of European cars would be in a small number [compared with] the total size of the Indian market by 2017. They may target just 1% of the total domestic market. But at Maruti Suzuki we largely cater to the mass market, which starts from the entry level to mid segments.”
Toyota Kirloskar Motor (TKM) vice chairman and director ShekharViswanathan said: “Other FTAs do not carry concessions for the automobiles sector and this would distort the field for international players operating in India. We have received assurances from the Indian authorities, who have categorically told us that the interest of companies such as Toyota Kirloskar Motors, which have set up local plants, would be protected.”
