Auto exports may get tech fund push.

The government is ready to take up for consideration a proposal for setting up a technology fund to boost auto and auto component exports on the same lines as the fund that has been put in place for the textiles sector.

Commerce secretary Rahul Khullar assured members of the Engineering Export Promotion Council (EEPC) that if they presented a proposal on the issue the commerce ministry would take a serious look at it.

Former EEPC chairman R. P. Jhilani told Mail Today that the council was already working on the proposal which would entail a certain proportion of the earnings of exporting companies to be set aside for the fund with the government providing a matching amount.

"We will now expedite work on the proposal so that it can be taken up at the earliest," he added. Khullar said it is imperative for the Indian auto and auto component manufacturers to look ahead and move up the value chain.

He said the Indian auto sector would have to prepare to look ahead at future technologies, such as state-of-the art electric cars to be able to compete with leading manufacturers of the world. He explained the auto sector was in for a "shake-up" as soaring oil prices, concerns over climate change and the need to drastically reduce vehicle emissions would require new technologies to be introduced.

"Indian companies should not lag behind advanced countries but take the lead in introducing new technologies so that they can take advantage of this shake-up," he added.

The Indian auto sector should not aim at hiding behind high tariff walls and operating in protected markets but work towards competing at the world stage, Khullar said.

According to market analysts, Khullar's view makes sense.

The fact that the Indian company manufacturing the Reva electric car has tied up with GM India to provide its technology for a new version of the Spark small car shows that there is potential for stepping up research and development ( R& D) efforts in this segment, the analyst pointed out.

Khullar also said India's auto vehicle exports are constrained by a narrow focus and it is necessary to target newer markets accelerate the exports momentum.

Khullar emphasised that India needs to enter into trade agreements with identified thrust markets. He said the strategy paper commissioned by EEPC India makes the point that success of past trade agreements has been limited due to the restrictive nature of PTAs that cover only a small cross section of goods rather than the free trade agreements (FTAs) and Comprehensive Economic Co- operation Agreements ( CECAs) that other lowcost competitors such as Mexico and Thailand have entered into.

"The FTA with ASEAN, CEPA with Korea and CECA with Singapore are, therefore, steps in the right direction and need to be undertaken for all the identified thrust markets in the order of priority to enhance India's trade," he added.

Khullar prescription:

    * The Indian automobile and auto component makers should move up the value chain.
    * Indian auto sector would have to prepare to look ahead at future techs.
    * The need to drastically cut vehicle emissions would need new technologies.
    * Indian cos should not lag behind advanced nations in introducing new techs.
    * The domestic auto sector should not aim at hiding behind high tariff walls.
    * It is necessary to target newer markets accelerate the exports momentum.
    * India needs to enter into trade agreements with identified thrust markets.

Source : India Today