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Informist, Monday, Sep 9, 2024

NEW DELHI – India's auto sector must consider buying off a German carmaker, which is currently under stress due to a fall in demand in Europe's car market, Commerce and Industry Minister Piyush Goyal said today, without mentioning the name of the German company. 

"I will give you a simple message I received probably a week ago about a very large German (auto) company. As a matter of respect, I will not take the name. Now the gentleman who sent me the message was urging me that India needs to buy it (the company) off," Goyal said at the 64th annual session of the Automotive Component Manufacturers Association of India. "Government will not be in a position to take a decision overnight, assess the pros and cons of the valuation, and negotiate. But anyone of you can possibly do that from the private sector."

Goyal was likely referring to Germany's Volkswagen, which is mulling closing its factories to cut costs. The company has also announced that it will prematurely dissolve the employment protection agreement that would have prohibited lay-offs through 2029. 

"With that company will come a large amount of technology which India could do wonders with," Goyal said.

The minister also suggested the auto component sector to work towards attracting a good share of foreign direct investment from the European Free Trade Association. As part of its trade deal with India, the European bloc— comprising Switzerland, Norway, Iceland, and Liechtenstein— has committed a foreign direct investment of $100 bln in India in the next 15 years. 

"They are committed to put in a $100 bln in India. They don't have much manufacturing in those four countries, but they do have some technologies," Goyal said. "I wouldn't be surprised if you (auto sector) can attract some good investments from the EFTA countries to come to India."

Goyal told the sector to also prepare a roadmap for the next three years. "We are the fifth-largest GDP in the world and at that point of time you are the third-largest auto sector in the world. We expect to become the third-largest GDP in the world in the next three years. By that logic, if you jump two points..."

The sector has set an export target of $100 bln for itself that it aims to meet by 2030. Goyal reiterated the goal and asked the sector to boost its production for higher exports. 

India had exported auto parts worth $7.70 bln in 2023-24 (Apr-Mar), up 5.9% on-year. In the current year till June, the sector has exported goods worth $2.00 bln, as per the latest data available with the commerce ministry.  End

US$1 = 83.96 rupees

Reported by Krity Ambey

Edited by Deepshikha Bhardwaj

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