DGFT may relax car indegenisation norms

NEW DELHI, January 11: The director-general of foreign trade, NL Lakhanpal, is willing to consider "genuine" cases for relaxation ...

NEW DELHI, January 11: The director-general of foreign trade, NL Lakhanpal, is willing to consider "genuine" cases for relaxation of the 50 per cent indigenisation level to be achieved by car makers in the third year, as prescribed in the new automobile policy.

Lakhanpal told The Indian Express that he is calling car manufacturers individually in the next few days to understand the problems in the way of achieving the indigenisation norms and trying to resolve them.

He, however, insisted that for purposes of indigenisation, use of local materials alone will be taken into account and there is no escape from that.

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For instance, if a vendor chosen by a manufacturer imports components to turn out an essential item like a gearbox, the indigensation level will be calculated on the quantum of local materials used. In other words, "local value added will be the determining factor for arriving at the indigenisation level". If no materials have been procured locally by a vendor, it will be construed as having failed to fulfil the indigenisation norm.

"It does not matter if a vendor chosen happens to be a nominee of a manufacturer so long as domestic buying of materials also takes place in order to give a fillip to ancillarisation," Lakhanpal explained. He said that instances had come to the DGFT’s notice that some of the car makers were taking into account imports of components made by their vendors for purposes of indigenisation.

He said he had consultations with the department of telecommunication on the formula used for determining indigenisation so that it could be applied to the sector.