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India rejects demand for review of auto policy

Despite stiff opposition from the United States, European Union and Japan, the Indian government feels there is no urgent need to review its automobile policy.

''There is no need to review the policy now and neither is there any move towards this end. People are opposing it but it can be debated,'' Director-General of Foreign Trade N L Lakhanpal said in New Delhi today.

The department, he said, is closely watching the developments at the World Trade Organisation on the issue of quantitative restrictions. ''If all QRs have to go by 2001, the auto policy would by itself collapse. But till such time, there are no plans to review the policy... The existing policy would stay,'' he added.

As per the revised guidelines of the Indian automobile policy, the government has decided to maintain the indigenisation levels at 50 per cent and 70 per cent for three and five years respectively, but altered the formula for calculating the levels.

Hitherto, even ten per cent import content in a component used to be calculated as imports. But now, the government has decided that imports upto 50 per cent by vendors for making components would be considered as local content.

Besides, once the car company reaches the prescribed limit of indigenisation, it would move out of the purview of the MoU and be free to import and export components as well.

However, car companies would automatically move back into the purview of the MoU once a new model is introduced. ''Car companies have to maintain the indigenisation level of 70 per cent at all times, else all the conditions of the policy would be applicable to them.''

UNI

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