02/2015

EU – India FTA negotiations

Automobile industry perspective

INDIA DELEGATION MEETING

EUROPEAN PARLIAMENT, STRASBOURG

Máté Kander

Trade & Economics ManagerEuropean Automobile Manufacturers' Association – ACEA

ACEA MEMBERS

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12.7 million direct and indirect jobs

€32.3 billion in R&D spending, largest private investor

€95.1 billion positive net trade contribution

€388.8 billion in tax revenues (EU14)

KEY FIGURES ABOUT THE INDUSTRY

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Market size:1•2013: 2,994,265 units soldo

2020 forecast: ~5 million units expectedo

Production in India:2•2013: 3,654,532 units producedo

2020 forecast: ~ 6 million units expectedo

EU – India automobile trade (2013):3•EU exports to India: 7,308 units (5825 PCs + 1447 CVs)o

India’s exports to the EU: 174,994 units (174,564 PCs + 430 CVs)o

EU trade deficit : 167,678 units o

India is a growing market and production base, increasing competitiveness

EU exports correspond to only 0.24% of the Indian automobile market

12 Source: IHS Global Insight 3 Source: EUROSTAT

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Facts and figures

EMERGING INDIAN AUTO MARKET

Crisis and slow recovery in the EU auto market1:•First increase after 6 years of decline: 5.7% growth in 2014o

Still much below pre-crisis levels: o

12.5 million cars registered in 2014, 16 million in 2007

Increased importance of international trade:•Growth expected mostly from outside Europe (notably emerging economies).o

Exports are key to sustaining jobs and growth in Europe.o

ACEA supports trade agreements that are reciprocal, free and fair.o

Key role of emerging markets:•The market of India has remained closed to European exports.o

ACEA is in favour of an ambitious agreement with India.o

1 Source: ACEA

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A broader trade policy perspective

IMPORTANCE OF TRADE

India maintains prohibitive tariffs:•Passenger Cars: 125%o

Commercial vehicles: 10 %o

Car parts: ~ 21.5%o

Additional duties (e.g. excise duty):•Up to 40% o

Levied in addition to tariffso

India is not a Contracting Party of the UNECE 1958 Agreement:•Unique regulationso

Further increasing the costs to manufacture for the Indian marketo

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High barriers despite increased competitiveness

INDIA - A CLOSED MARKET

Full support for a balanced and ambitious FTA:•

Joint auto industry letter with CLEPA to Commissioner Ashton in 2009o

ACEA requests a balanced and ambitious outcome:•

Full elimination of import duties (‘0 for 0’) on vehicles and componentso

No negative list of automotive products from tariff dismantlingo

A strong NTB Automotive Annex - acceptance of UN regulationso

Prohibition of duty drawbacko

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A significant opportunity

EU - INDIA NEGOTIATIONS (1)

To our understanding, India has opposed full duty elimination:•

India would maintain a high 30% import duty on carso

Potential TRQ of 50,000 – 60,000 cars with a duty of 10%o

Commercial vehicles on negative listo

Maintaining some import duties on auto partso

India has opposed a meaningful NTB Automotive Annex:•

Unwillingness to join the UNECE 1958 Agreemento

Unwillingness to recognize key UNECE regulations o

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Lack of progress

EU - INDIA NEGOTIATIONS (2)

The discussed package would lead to an unbalanced agreement.•Committed to maintaining jobs in Europe but need a balanced outcome. o

India’s auto industry is not an infant industry any more, has reached a high level of ocompetitiveness (figures).

ACEA requests ‘0 for 0’ duty elimination. Tariff dismantling scheme •can be asymmetric but must come to zero.

The lack of a meaningful NTB Automotive Annex would allow India •to put new NTBs in place.

The EU – India FTA is a great opportunity for our sector. ACEA fully •supports a balanced and ambitious FTA, but with the right conditions.

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Messages for the visit of the EP DEL to India

ACEA PERSPECTIVE

NEW GOVERNMENT, NEW CHANCE?

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2014 elections: Absolute majority for BJP-NDA.•

As opposed to previous coalition government, possibility to •adopt difficult decisions.

SIAM (Society of Indian Automobile Manufacturers) continues •to oppose an ambitious outcome.

Mixed messages from the new government:•Commerce Secretary Kher: o

‘EU must reconsider its position on full duty elimination’ (Interview in Sept, 2014)

‘Indian auto industry cannot be protected forever’ (At SIAM Annual Convention, 2014)

Encouragement from the EP DEL would be appreciated.•

Thank you for your attentionwww.acea.be@acea_eu