Duty concessions on auto components in FTA need calibrated approach: Assocham

Assocham President Nirmal Kumar Minda has cautioned against a blanket reduction in import duties on auto components under the proposed trade pact with the EU, saying such concessions must be "calibrated" to avoid hurting domestic manufacturers, particularly MSMEs.

He said that if duty concessions to the European Union (EU) under the proposed agreement provide domestic players access to advanced technology, larger markets and stable supply chains, there is merit in considering them, particularly for products where India has a cost advantage.

"But a blanket reduction may hurt domestic suppliers, particularly MSMEs, as EU components often come with strong scale, automation and subsidies," he told PTI in an emailed interview.

India and the 27-nation EU bloc have been negotiating a trade pact since 2007. On December 9, the two sides concluded a high-level meeting on the pact.

The EU is seeking concessions in import duty in the country's automobile and components sectors.

Duty concessions on auto components in an FTA (free trade agreement) need a very calibrated approach, he said adding with the European Union, the question is not just tariffs but the overall competitiveness equation.

Minda is also Chairman and Managing Director (CMD) of Uno Minda, a leading auto components maker.

"Any concession must therefore be linked to clear reciprocity, phased timelines, and safeguards to ensure India's manufacturing base continues to grow," he said.

He was replying to a question whether he is in favour of giving duty concessions on auto components in FTAs particularly with the EU.

He also said that the new trade agreements have helped improve market access, reduce duties, and bring in long-term investment commitments that support manufacturing, technology, and services.

Many sectors are seeing better export traction, though MSMEs still need support to fully leverage these opportunities.

"Looking ahead, any potential FTA with large advanced markets including US and EU must carefully address reciprocal tariff expectations, regulatory standards, and sensitive product lines,” he said.

Minda noted that if designed well, such agreements can significantly enhance India's competitiveness and help our industries integrate more deeply into global value chains.

India has implemented trade pacts with countries including the UAE, Australia, and four-nation EFTA bloc. It has also signed a lactose with the UK.