The commerce ministry said on Wednesday the automotive sector needs to gear up to meet the issues like rising raw material prices, climate change and regulatory compliance, otherwise it will lose out in global competition.
"If we do not gear ourself up to those changes, it's goodbye for us," commerce secretary Rahul Khullar said after releasing a strategy paper on the 'Growth of auto and auto component exports' in New Delhi.
The study has been conducted by Ernst & Young on behalf of EEPC-India, the apex body of engineering goods exporters.
Stating that the global automotive industry is in transition, he said consolidation and restructuring issues relating to regulatory compliance, risk management and climate change are creating transitional challenges and opportunities throughout the automotive value chain.
The secretary also cautioned the industry against seeking protection behind 'tariff walls' in free trade agreements with different countries.
"Unless you (automotive industry) colour it with vision of future we are not going to make it (compete in the global market)," Khullar said.
At present the government keeps the auto component sector in sensitive list in free trade agreements to protect the segment from higher tariff reduction, while auto imports are subjected to over 100 per cent customs duty.
Khullar, however, said the government by and large try to protect the domestic industry in trade pacts while liberalising tariff lines.
As per the Automotive Mission Plan 2006-16, the industry is expected to account for 10.4 per cent of the gross domestic product by 2016 touching a total size of $145 billion.
A number of domestic and foreign auto and auto component companies have planned major investments in the country-- prominent among those are the small car projects of global auto majors like Toyota, GM, Ford, Nissan and Volkswagen.
The domestic automotive industry in 2008-09, attained a revenue of Rs 2,50,778 crore ($56 billion) with investment of over Rs 50,000 crore (Rs 500 billion) in the last 10 years spread across the entire value chain.
Key export markets are Europe, Africa, the UAE and Qatar. The US and the EU account for about 60 per cent of auto component exports.
The study has recommended the industry to go in for market expansion, focus on green technologies and technology enhancement.
It also wants the government to accelerate bilateral and regional trade negotiations and enhance trade facilitation, beside other things.
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