Assocham President Nirmal Kumar Minda has cautioned against any blanket reduction in import duties on auto components under the proposed India–European Union trade agreement, warning that poorly calibrated concessions could hurt domestic manufacturers, particularly micro, small and medium enterprises. In an interview with PTI, Minda said that while the pact could offer Indian companies access to advanced technology, larger markets and more stable supply chains, duty concessions should be considered selectively, especially in segments where India already enjoys a cost advantage.

He said an across-the-board cut in duties could place Indian suppliers at a disadvantage, as European auto components often benefit from greater scale, higher automation and government subsidies. India and the 27-nation EU bloc have been negotiating a free trade agreement since 2007, with the latest high-level meeting concluding on December 9. The EU is seeking import duty concessions in India’s automobile and auto components sectors as part of the negotiations.

Minda, who is also Chairman and Managing Director of auto components maker Uno Minda, said the issue goes beyond tariffs and must account for overall competitiveness. He added that any concessions should be linked to clear reciprocity, phased implementation timelines and safeguards to ensure India’s manufacturing base continues to expand.

Despite the potential opportunities from trade agreements, Indian MSMEs, particularly in auto components and other manufacturing segments, are facing increasing pressure from low-cost imports. According to a report published by The Indian Express in September 2024, several MSME-intensive sectors are seeing domestic production displaced by foreign goods, especially from China. The report noted that China accounts for 95.8 per cent of India’s umbrella imports valued at $31 million and 91.9 per cent of artificial flowers and human hair articles worth $14 million.

Chinese imports also dominate segments such as glassware with a 59.7 per cent share, handbags at 54.3 per cent and toys at 52.5 per cent. Even traditionally strong Indian sectors, including ceramics with a 51.4 per cent import share and musical instruments at 51.2 per cent, are witnessing rising dependence on Chinese products, according to a separate analysis by the Global Trade Research Initiative. These trends, Minda said, underline the need for a cautious and well-structured approach to duty concessions in future trade agreements.