India
offers Zero for tariffs on steel auto parts, pharmaceuticals from the US
Extract
from the article:
India has proposed a zero-for-zero tariff arrangement with the United States,
offering to eliminate customs duties on a wide array of auto parts and steel
imports originating from the US. This strategic move aims to foster stronger
bilateral trade ties and enhance supply chain integration between the two
nations, especially in the automotive and steel sectors that have traditionally faced
tariff barriers. By reducing these tariffs, India seeks to stimulate
competitive sourcing, attract advanced manufacturing technologies, and drive
down input costs for domestic industries dependent on these raw materials and
components.
The initiative also signals India’s broader push toward
economic liberalization and global trade cooperation, aligning with its
long-term industrial policy goals. The removal of tariffs on US steel and auto
parts could potentially reduce production costs and encourage the modernization
of India’s automotive supply chain. Moreover, this zero-for-zero tariff offer
is likely to incentivize US exporters while positioning India as a more
attractive manufacturing hub, reflecting a calculated bid to balance trade relations
and nurture mutual economic opportunities amid geopolitical complexities.
My
Take:
A. FDI
(automatic route) in Car Breaking Units
"FDI (automatic route) in Car Breaking Units will help bring latest
technology, safer working conditions and high productivity. It will also raise
the wage levels. There should be no Import Duty / Customs Duty on cars imported
for breaking. GST on sale (domestic or export) of salvaged materials should be
only 5%. BENEFITS : 25 million persons currently employed by Auto Component
Industry will be able to retain their jobs ( - of course, they must agree to be
re-trained / re-skilled, in order to save their jobs). Cost of our STEEL
MANUFACTURING by Indian Steel plants will go down since they will get 45
Million tons of Steel scrap (from those 50 million cars) at very low input
cost."
Reflecting on this from today’s vantage point vis-à-vis the
newly announced zero-for-zero tariff scheme on US auto parts and steel imports,
it is evident that the proposal dovetails perfectly with my earlier vision. By
easing tariff complexities and embracing foreign investment in car-breaking
facilities, India is not only embracing a holistic economic strategy — one that
spans the entire lifecycle of automotive products — but also catalyzing
industrial symbiosis. The seamless flow of materials, from dismantling vehicles
to supplying affordable steel and components, can significantly curtail
production expenses. This harmonization exemplifies how deliberate policy
frameworks, years in the making, are now crystallizing into tangible growth
trajectories aligned with technological sophistication and employment security.
B. Car
Grave Yard of World
"Should be no Import Duty / Customs Duty on cars imported for breaking.
GST on sale (domestic or export) of salvaged materials should be only 5%.
BENEFITS : 25 million persons currently employed by the Auto Component Industry
will be able to retain their jobs ( - of course, they must agree to be
re-trained / re-skilled, in order to save their jobs). Cost of our STEEL
MANUFACTURING by Indian Steel plants will go down since they will get 45
Million tons of Steel scrap (from those 50 million cars) at very low input
cost."
This earlier insight, laid out in clear terms, underscores a
keen understanding of the supply chain’s raw material backbone — steel scrap.
Now, with India’s offer to waive tariffs on imported steel from the US, a
critical piece of this intricate puzzle is being addressed at the governmental
level. Tariff elimination not only reduces cost barriers but also facilitates
an efficient inflow of materials that are crucial for domestic manufacturing
resilience, as I emphasized then. The policy evolution we witness today echoes
and validates the foundational blueprint advocating minimal fiscal encumbrance
and skill development, carving a pathway for a sustainable and globally
competitive automotive ecosystem.
Call to
Action:
To the Honourable Ministry of Commerce and Industry, and the Ministry of Steel:
Now is the time to synergize these promising tariff concessions with robust
support for downstream industrial processes such as car breaking and recycling
units. I urge policymakers to actively pursue automatic route FDI approvals in
car-breaking sectors, accompanied by simplified GST regimes on salvaged
exports. This integrated approach will not only boost employment for millions
engaged in auto component and steel industries but will also strategically
reduce input costs, invigorating India’s manufacturing output. Collaborative
frameworks with US partners for technology transfer and skill development
should be prioritized to realize the full potential of this zero-for-zero
tariff landscape. Let us transform this moment into a durable competitive
advantage for India’s industrial future.
With regards,
Hemen Parekh
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