Don't cut duty on cars from EU: Tata

India's largest automobile manufacturer Tata Motors on Friday came out against the proposal to cut import duty on cars from Europe even as its subsidiary firm UK-based Jaguar Land Rover stands to gain from it. Tata Motors said any reduction in duties under the Indo-EU free trade agreement, negotiations for which is underway, would hinder the growth of the industry and distort the level-playing field. While others like Maruti Suzuki, Toyota, Honda and Hyundai have already spoken out against the proposal, this is the first time Tata has voiced its concerns openly. "It will hinder the growth of the industry and distort the level playing," said PM Telang, managing director, Tata Motors. "Any short-term policy shift is not advisable."

High tariff on import of cars and wines and spirits into India has become a thorny issue in the negotiations. EU wants India to slash import duties on passenger cars but Tata warned there are dangerous precedents that discourage such a move.

"Assembly operations in Australia have gone down drastically after the policy on cars was liberalised," he said.

Incidentally, Tata Group chairman Ratan Tata had said sometime back that the high import duties on cars and components were unrealistic and served as an artificial barrier of protection for local companies.

"The duty reduction should happen in general and not as part of an FTA with a particular country," a spokesperson told HT. "Also there should be a timeline for it so that the industry can plan accordingly."

Industry body Society of Indian Automobile Manufacturers (SIAM) and heavy industries minister Praful Patel have also opposed a reduction in import duties.

"Our policy of high tariffs along with free market access through investment is paying off well and there is no reason why we should tamper with this policy at this stage," Patel said in a letter to the Prime Minister.

"We have sensitivities about our automotive industry and EU will have to accept that... significant reduction of tariffs at this stage would encourage imports at the cost of domestic value addition and would adversely affect the investments and employment in the domestic economy."