Auto industry in India is already ailing under the economic crisis, high input costs and expensive car loans. DGFT has slapped a new norm on the auto industry that restricts imports of certain key components in India. This means that production of car in certain manufacturing units will come to a stand still without these components.
Components like transmission shafts and bumper parts fell under free imports category till now. According to the new notification issued by the Director General of Foreign Trade, these auto components now fall under the restricted category. Flat-rolled products of iron or non-alloy steel of a width of 600 mm or more, hot-rolled, not clad, plated or coated have also been placed under the restricted categories which are important components used to make auto grade steel. These products are used by the auto component manufacturers to make chassis of the cars.
P Balendran, Vice-President, General Motors, ruefully commented "This is a regressive step and it seems that 'licence raj' is back. This will further hamper production plans at a time when the companies are bleeding."
The new notifications means delayed shipments as the companies will need to apply for import license in order to import these components and then use them at their factories. The new notification could not have come at a worse time than this for the car companies in India.