In an exclusive interview with SME Times, the Automotive Components Manufacturers' Association (ACMA), President, Surinder P. Kanwar said that India's foreign trade policies with other countries should be more liberalised for the growth of the country.

Excerpts of the interview...

The industry was quite upset about the decline in the growth of the auto component industry. What is your opinion now? Is there any improvement?
Surinder P. Kanwar: There is a lot of sentimental thing which is happening. The finance costs have not come down. Fuel prices have gone up. There are lots of problems in different segment of the industry. There has been no investment on infrastructure. The whole industry has been impacted because of the situation. And, I strongly feel that this is a cycle. We are not use to this single-digit growth. We are always use to the double-digit growth. It has impacted badly to the entire industry. The auto component industry automatically gets impacted if the OEMs are not doing well. This is the cycle and hopefully next year if all infrastructure projects as planned by the government in the Budget are met things will automatically move in a positive direction. So, I am not very negative. When the graph comes down, it takes sometime to pick up. For the long-term, we are very confident that the market will come back to the earlier level. But, if you ask me the short term, there is going to be an impact and the industry growth will be down.

Is there some kind of development happening in the European economy? We know that the US to some extent has been showing revival. Your take on this.
Surinder P. Kanwar: If you compare then the US is doing very well. It is better than what they were doing. They have gone up. That is also giving benefit to India. Europe is still down. But as I am supplying to the Europe, I am seeing some light there. European condition was very low and bad. Only Germany where I find things are moving. It has been showing some light but it is too early to comment till we see the situations and till the numbers go up.

How about the other markets?
Surinder P. Kanwar: We are importing a lot from China. Much stuff is also coming from Thailand and mind you India is signing all Free Trade Agreements (FTAs) all over the world. At the end of the day, it is the competitiveness of your country or component of any industry. You have to be independent. India believes in that very clearly. They do not want to support. On the contrary, the duties are coming down. If you see the duties earlier and if you see now, the duties have come down by 5-10 percent. There are components which have totally zero duty. We have to fight...

Are you trying to say that the FTAs signed with many countries are increasing imports rather than exports from the country?
Surinder P. Kanwar: Yes, of course! The imports are increasing in India. If you see the figures especially in the component industry, the imports are increasing. And, even in the car (the general imports as automobile) you see the high value-end cars, one car verses different variety of components and there value is different. The import value of India is increasing. There is no doubt on this whether it is coming from China, Bangkok, etc. This is going to happen and we have to compete with that.

What needs to be done to become more competitive?
Surinder P. Kanwar: We have to cut our costs. We have to become more productive. We have to be more technology-oriented. And, we have an edge still as a country. But there are lots of other things like infrastructure, and other issues such as labour laws, which is not like China. In India, we do not have it. The incentives China have, we donot have.

India has a big market and do not forget that we have the huge population. We are the youngest population in the world. So, I am not being negative to say that there is no progress. Today, China is also looking towards India. The growth in India is big and we all will get the benefits.

How are you dealing with counterfeit products?
Surinder P. Kanwar: In that case, I must tell you that in ACMA we have the 'Asli-Nakli' programme. We have a separate aftermarket committee where we are really teaching the people about duplication of products. We have taken this issue to the Ministry. We have prepared the white paper for them. There should be a strong law. There should be some kind of non-bailable thing for people who are doing it. The Ministry of Heavy Industry is looking very positive about that. We both are working together seriously to stop all that in the country.

Was the recent budget welcoming? Your observation on this...
Surinder P. Kanwar: Under circumstances the budget was O.K. The component industry have asked for certain things and they have considered it. I do not expect everything to come up. They have given the small scale industry incentives. They have talked about engineering and have also given money for education. These are positive steps that ACMA is looking for.

Was your expectation met?
Surinder P. Kanwar: Yes, whatever we have expected was given but other than that we have expected the Goods and Services Tax (GST) for the last five years that has not been done.

The FTP is to be announced early next month or by the end of this month. What is your expectation?
Surinder P. Kanwar: The foreign trade policies should be more liberalised. The government is very clear on that. We have only asked to make infrastructure system more positive. Some states have the local taxes like Octroi. We need to stop that. We have asked the government to look in the excise duties to make the industry globally competitive. The power costs and diesel costs are going up. I do not expect that the government is going to give benefit on this anymore.

(Namrata Kath Hazarika can be contacted at namratakh@tradeindia.com)