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Strategy to recharge auto exports

New Delhi, Nov. 4: The government is drawing up a strategy to promote automobile exports—a segment which has recorded a 20.76 per cent growth in 2000-01 over 1999-2000.

According to an inter-ministerial group, the Indian automobile and auto-component segments will require an incremental investment of Rs 1,539 crore and Rs 6,592 crore respectively to catch up with world standards.

Besides making an impact on the international automobile scenario, the government also plans to change the existing regulatory systems at the state level and amend the Motor Vehicles Act. The upgradation of the existing testing facilities will take a priority in the Tenth Five-year Plan—but the government wants companies to take the responsibility.

“The government plans to restrict its role to funding and let the management assume responsibility of these testing facilities. The new facilities will be built up in phases,” says the draft Plan. Industry also feels that given the stagnant domestic market for automobiles at the moment, targeting export growth is the best strategy.

With four-wheeler production peaking at seven lakh units in 2000, competition has intensified but the sales growth has not increased according to expectations.

“We are already exporting 28,000-30,000 completely knocked down kits (CKDs) this year. Though we expect this to go up marginally over the next year, the best possible help will be if India is able to finalise more preferential trade agreements with the Asean countries,” Ford India vice-president (external affairs) Vinay Piparasania said.

“At the moment we are exporting cars to South Africa, Mexico, Brazil and some completely built up units (CBUs) to Bangladesh. We also have a Rs 50-crore component trade with China. But as Ford’s facility in China starts increasing its local content, this trade will fall. Therefore we are looking for new destinations for the cars, which can be facilitated by bilateral ties,” he added.

However with exports accounting for 10 per cent of the total production of auto components, this segment is much more promising than automobiles. Exports in 2000-01 went up to Rs 1,915 crore.

But the country’s biggest automobile manufacturer feels that exporting cars will give it a greater foothold. Maruti has already secured export orders for 31,000 vehicles this fiscal, including 24,000 for its small car brand Alto.

“From 24,000 cars exported last year, we have achieved a 150 per cent growth this year. We plan to export 10 per cent of the cars made every year,” company executives said.

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