Draft auto policy outlines grand vision

After engaging in parleys for about a year with relevant sections of the automotive industry, including trade associations, the government of India’s ministry of heavy industries and public enterprises released a document titled “Draft Automotive Mission Plan (AMP) 2006-2016” at the recently-held annual convention of the Society of Indian Automobile Manufacturers (SIAM) in Delhi.

The good thing is that this document, which aims to be a blueprint of a joint vision for the automotive industry between the ministry and the domestic industry, is a draft – which points obviously to the fact that the government is keen to learn from its past mistakes of rushing into a policy document. The government expects the document to create debate, get and collate reactions and then have a more comprehensive and relevant document that would enshrine a vision. One could safely surmise that the mooting of the AMP indicates that the Auto Policy formulated in 2002 was either too sketchy or just not comprehensive enough.

The statistics put together in the document clearly reveals why the government has made an effort to answer a bullet-point question: “Why India?” Of the 10.59 million additional vehicles that were produced the world over in 2005, since 1997, the Asia-Pacific region’s contribution (excluding Japan) rose from 700,000 in 1997 to 1.6 million in 2005. In this picture, China moved from 1.582 million units to 4.6 million, India from 772,000 to 1.576 million and Thailand from 360,000 to 800,000 units. India is the second largest motorcycle manufacturer in the world after China.

##### PUTTING FORTH A VISION

The AMP aims at putting together a vision which will help enlarge the turnover of the industry from $ 34 billion to $ 145 billion by year 2016 with special emphasis on the export of small cars, MUVs, two-wheelers and auto components. The crux of the document is its section where several recommendations have been made in eleven key points which have been detailed: Appropriate tariff policy, infrastructure, expansion of domestic demand, encouraging exports, support to develop R&D, long-term emission roadmap, harmonisation of safety standards and road safety, incentivising modernisation of vehicle fleet, inspection and certification system, computerisation of RTOs and driver licensing system, and ensuring availability of human resource.

What the government can feel proud about is the Rs. 1,718 crore National Automotive Testing and R&D Infrastructure Project (NATRIP). While it is too early to see it, the interesting long-term facet of NATRIP will be its eventual leadership role in many of the eleven points listed above. In terms of its thinking on the tariff policy, the document says that while negotiating FTAs and PTAs with several regions or countries “care would be exercised in deciding which tariff lines would be included” and further adds that it will maintain to keep in the negative list the 84 automobile, engine and auto component tariff lines identified by the industry for FTAs with Thailand, BIMSTEC, ASEAN, China, Korea and Japan.

In the case of auto components the AMP says that the negative list could vary depending on the country or trading bloc. An important statement that the AMP makes is that the government will discourage the import of used / remanufactured vehicles and auto components and that remanufactured automotive products may not be treated like new. Adequate and relevant human resource is emerging to be one of the biggest challenges facing the industry and the document says that the sector has mooted the formation of a national automotive institute and the establishment of more automotive training institutes.

While it remains to be seen what contents the final AMP document will hold, the draft is nevertheless a welcome move to put in place a comprehensive commitment on what exactly needs to be done to take the Indian automotive industry ahead.