The free trade agreement with the European Union which is currently in the negotiation stage once again, is likely to see our country take a more relaxed stance as compared to two years ago where the talks broke down due to the former.
The negotiations began in 2007 and ground to a halt just about two years ago due to India taking a strong stance on certain issues which ultimately turned out to be points of contention among the nations involved. It appears that India now feels that it is in a better position after the parliament approved the raising of the foreign investment cap in the insurance sector from 26 per cent to 49 per cent.
For the auto sector this relaxed stance means there would eventually be a reduction on duties of high-tech components which in turn will reduce the import cost for both the company as well as the customers. However, to protect the domestic industry the cost of low-tech components will be kept high.
The report quotes an unnamed government official who has said that the auto industry is currently over protected and that we need to loosen up the strings in a bid to encourage competition as well as better products.
