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India will protect domestic auto industry's interest in European Union FTA

The government today said it will protect the interests of domestic automobile industry while negotiating free trade agreement (FTA) with the European Union and will not put the sector at "disadvantaged" position.

"Any FTA has to be in reciprocity. However, we will ensure that our auto industry is not disadvantaged.

"Although we cannot have protectionism in today's day-and-age, we will ensure that the interest of the domestic automobile industry is not compromised," Heavy Industries and Public Enterprises Minister Praful Patel told reporters on the sidelines of the Mahindra Navistar Award function here.

India has protected the sector in almost all the free trade pacts it has implemented including with Malaysia, ASEAN nations and South Korea. However, Indian automobile industry has apprehensions that with the FTA with EU, import duties on passenger cars may be slashed.

EU is demanding heavy duty cuts in the India's automobile sector.

Talking about the diesel pricing policy, Patel said: "India's automobile industry needs clarity on diesel pricing. The automobile industry has no say on the pricing of diesel, it is only asking for clarity. The industry also does not favour dual pricing as it can lead to misuse."

The Ministry does not support additional taxes on diesel passenger vehicles as it consumes only about two per cent of the total diesel consumption in the country, he added.

Asked about the slowdown in vehicle sales, Patel said: "The automobile slowdown is a matter of concern but it does not seem that it will go on for long considering the current economic environment, and it is too early to talk about government support to industry as was done in 2008-09."