[anjan_c2007]

Well said by Mr Piyush Goyal saying that the two top automakers in India have cost India billions of US dollars of foreign exchange outgo, adding their share to the trade deficit with South Korea (also mentions "and other countries") and Japan. No figures have been revealed by the Minister. Had he done some homework, his contentions would have been more illustrative and objective.

The Minister's contention is that India has a Free Trade Agreement (FTA) with these two countries (S. Korea and Japan) in the Far East. And using provisions of the FTA, Hyundai and Kia have imported components for their cars liberally from their principals in South Korea and from other countries, causing such a trade deficit.

The Minister also asserts that with the provisions of this FTA, India can export finished products like steel but the Japanese and South Korean buyers are not amused. Instead, they prefer to buy their home manufactured steel, despite the homemade product having a higher price tag even if it is $100 higher per ton, owing to their nationalistic spirit to favour homegrown industries.

Piyush Goyal also says that Indian and India based industries go the extra mile to import materials from China too, for manufacturing if it is cost saving for them.

The Minister's contentions are all acceptable and if taken in the right spirit, should be a cause of concern and worry for our country.

However, the points that are debatable include:-

(1) The Minister has not mentioned about export earnings in US dollars to enrich our foreign exchange reserves by these two car makers.

(2) The two car makers are neither circumventing, nor breaking any extant rule or law by engaging in such liberal component imports from their parents at cheaper prices, that they prefer rather than manufacturing them here in India.

(3) The proponents in his and other Ministries concerned who had drafted such a FTA knowing fully well the age old nationalistic affinities the citizens of these two Far Eastern democracies have, could have taken all such pros and cons into cognisance while drafting such rules and laws. This could have been debated before the FTA was finalised with signatures of all concerned. It is common knowledge that the Japanese and South Korean companies export electronic goods, automobiles and many more consumer products and industrial use items to the trade liberal west. Most of the homegrown industries in the West, rivalling their products with the Japanese and South Korean have either perished or face the heat from intense competition, every moment in the wholesale and retail markets.

(4) To mention an off topic point for illustration, Japan has been importing millions of tonnes of raw iron ore since nearly five decades or more from India. It manufactures steel and exports it to all desirous. China is the world's top steel producer, while Japan and India keep on changing positions at #2 and #3. India has emerged in the top three positions as a steelmaker only in 2014, after decades of stagnation as a non entity and laggard. India has excellent iron ore reserves and ranks among the top ten in the world. Japan imports raw iron ore and is a top manufacturer of steel.

(4) Crying wolf at this stage is no good. Neither will it heal the wound, nor can such liberal imports be stopped with such speeches and public utterances. The moot point is that the targeted companies are not breaking any extant law or rule of the land whatsoever.

These facts and much more were and are all in the realm of knowledge of our policy makers, who remain apathetic, less responsive, inflexible, hide bound and bureaucratic, creating their own problems that makes us vulnerable. Shouting out loud for sympathy from stakeholders will only result in inconclusive debates, if any.

The link:-

https://m.timesofindia.com/city/pune...w/98243833.cms

[EV NXT]

The reason for such utterances are clear and cannot be discussed here.

Hyundai is the single largest exporter of cars from India.

None of the Germans or Swedes export from India, so why is he barking up the wrong tree?

Hyundai’s export record over the years:

https://www.hyundai.com/in/en/hyundai-story/exports

From the link:

[harshbhat]

Talking specifically in the automotive industry, look at the taxes and charges govt levies. Every paisa manufacturer saves, will build up rupees in the on road prices for the consumer. Cars are expensive affair for people in India to not make a choice based on money but on nationality. There has to be big reforms in personal tax system, automobile taxes and RTO charges before blaming poor consumers for buying decent cars being punished for it

[Mr.S]

This is not a correct statement. I haven't brought a Hyundai or Kia but they are also value for money & in Kia's case good on designs as well. I would prefer a Tata or a Mahindra because of the safety factor & the thing construction of Hyundai/Kia but Hyundai/Kia are offering good value & are exporting. These hot statements come from ministers who have fun with public money but is he expecting Indian consumer with per capita income below Bangladesh & many African companies to over-pay.

We are one of the few large economies paying 40-50% taxes on domestically produced cars. For a 50L Fortuner, government is taking home 20L. We are incentivizing people to buy cheaper unsafe cars.

The government should focus on the economy which hasn't grown in 8-9% range in the last 15 odd years. China sells 15-20L Vehicles a month. Imagine the jobs especially in auto ancillary & the ecosystem which will be build with that kind of a market. And government keeps attacking them !

[lsjey]

Let’s look at some data from this source:

South Korea’s annual trade with India in the year 2022 (Jan-Dec) reached an all-time high figure of USD 27.8 bn. This included export of USD 18.9 billion and imports USD 8.9 billion from India.

The imports from Korea are double that of the exports from India.

The car manufacturers are entitled to import or not depending on their strategy. At the same time GoI and its minister is entitled to point out non tariff barriers if any. It is the job of the GoI and minister to promote exports and support local production.

Given that the forex reserves are depleting it is understandable that GoI is pressuring industry to reduce imports. But again, it is upto the car manufacturers to take up the advice of GoI or not depending on their strategy and overall cost competitiveness.

Regards,
Lsjey

[dragracer567]

An irresponsible statement IMHO. Hyundai and Kia have made India one of their most important manufacturing and export hubs. If anything, these companies have contributed to the industrial capacity of India as much as Maruti, Tata or Mahindra. Annoying them with such 'in your face' statements is really uncouth. Not as bad as his comments on the Tata group though. I wonder if he can muster the courage to criticize our 'double A' billionaires as well who are turning into India's chaebols - the kind that is actually sucking the growth & innovation out of the Korean and Japanese economies.

[prajwalmr62]

Be ready to hear more such statements and remarks since the elections are a year away from now. None of these hold water and are there just to put more "India" sentiment.

I'm expecting opposition also to jump the "nationalism" bandwagon for this election and come up with more colorful statements. After all, why should only one party benefit from all pro-India sentiments?

[NetfreakBombay]

Originally Posted by lsjey

Let’s look at some data from this source:



The imports from Korea are double that of the exports from India.

This comparison should consider exports of Hyundai group from India to other countries such as EU / US.

[Mr.S]

Originally Posted by lsjey

Let’s look at some data from this source:



The imports from Korea are double that of the exports from India.

The car manufacturers are entitled to import or not depending on their strategy. At the same time GoI and its minister is entitled to point out non tariff barriers if any. It is the job of the GoI and minister to promote exports and support local production.

Given that the forex reserves are depleting it is understandable that GoI is pressuring industry to reduce imports. But again, it is upto the car manufacturers to take up the advice of GoI or not depending on their strategy and overall cost competitiveness.

Regards,
Lsjey

Forex Reserves are 560 odd billion. I still remember a decade back we used to be @ 300-350B $ of Reserves & Rajan started this trend of stockpiling for a rainy day which prevented appreciation of the rupee & thus exports. The Rainy Day/QE has come & is almost over or will be in a couple of quarters. And instead of 300-350-400B, we are sitting with 550+ of Reserves. That is a record. You will have periods of volatility & RBI will in phases jump in & lose 50B if need be to support currency stability. Long term trajectory wise reserves are quite high & infact Modi had a tiff with Udit Patel regarding using these reserves. Reserves are a complete non-issue & I would say more than required.

We do have a trade deficit & most of that is with China. I am not sure what the latest figures are, but it would be near a 100 B $. Auto Industry is one of the few decent industries which we are probably net exporting cars. Look @ other industries? Why are we importing so much of Gold ? China has dominated the Solar Panel manufacturing & EV ecosystem while our government is busy promoting Hydrogen which Bush tried & failed 2 decades back.

And the Auto industry has huge taxes/duties & low to moderate profitability & the car market in India is not growing @ the pace it should be (IMO it should grow @ 15-20% CAGR atleast given low car penetration & gap to China, India's Nominal GDP Growth will be 14% with inflation @ 7% & Real GDP @ 7%).

[Chhanda Das]

I would request the honorable Minister not to get into those maths since maths never helped Einstein discover gravity. His words not mine.

https://www.youtube.com/watch?v=JkRgynDpxqk

One can easily put two and two together if one follows the chronological order of the links below :-

1) https://indiancompanies.in/top-compa...-market-share/

2) https://www.business-standard.com/ar...2900996_1.html

3) https://www.indiatoday.in/india/stor...401-2019-11-13

4) https://timesofindia.indiatimes.com/...w/78696078.cms

Perhaps the honorable Minister should bestow his gaze somewhere else in areas more worthy of attention :-

https://www.thehindu.com/news/intern...le66372861.ece

And this was after India's ban on Aliexpress

[Nithesh_M]

Originally Posted by anjan_c2007

Piyush Goyal also says that Indian and India based industries go the extra mile to import materials from China too, for manufacturing if it is cost saving for them.

It is weird how the minister doesn't publically call out by name the two or three local manufacturers for continuously importing items to manufacture all their cars from China. Local manufacturers doing this EV push by importing bulk of batteries and motors from China doesn't deserve bashing is it?

Sounds like a hit job against Koreans to me especially considering how the new entrant Kia who happens to be Hyundai's sister brand has built such a big market in such a short span of time right under the nose of existing players. Is the minister attacking them via name on the behest of local manufacturers?

[EV NXT]

Originally Posted by Chhanda Das

since maths never helped Einstein discover gravity.

But he's technically correct... maths didnt help Einstein discover gravity.

[ajmat]

You give and you get! Look at the ecosystem these companies have provided!

• Thousands of direct and indirect employment opportunities - some taxable!
• A thriving supply base promoting exports and skills
• Exports as long as the transfer price is realistic
• Lots of tax collected as people like to keep buying decent contemporary cars.

The minister should quantify the actual loss/ deficit after considering these factors

[fhdowntheline]

Originally Posted by EV NXT

But he's technically correct... maths didnt help Einstein discover gravity.

Well, there is some context to it. There are various accounts of Einstein having collborated with other mathematicians ( Einstein was a physicist) while developing the theories, like Marcel Grossman, and by some rumors , also his first wife who was very good at Math.

[Stribog]

Originally Posted by anjan_c2007

Well.

These facts and much more were and are all in the realm of knowledge of our policy makers, who remain apathetic, less responsive, inflexible, hide bound and bureaucratic, creating their own problems that makes us vulnerable. Shouting out loud for sympathy from stakeholders will only result in inconclusive debates, if any.

The link:-

https://m.timesofindia.com/city/pune...w/98243833.cms

Am not sure if you read the whole article but the minister explicitly says that the govts of Korea and Japan don't block trade. This was aimed very clearly (to me at least) at Indian manufacturers who even for a 10 paise arbitrage will import rather than buy local.