Indian automobile industry has approached the government to consider a rupee-based payment mechanism for trading with African nations as companies face a major hurdle in dollar-denominated payout
Indian automobile industry has approached the government to consider a rupee-based payment mechanism for trading with African nations as companies face a major hurdle in dollar-denominated payout.
The industry has also asked for negotiating free trade agreements (FTAs) with more Latin American countries like Chile, Peru and Colombia to boost exports from the country.
"We have approached Ministry of Commerce for rupee trade with African countries as we are facing a challenge in dollar trade in these big export markets like Algeria and Nigeria," Society of Indian Automobile Manufacturers (SIAM), Deputy Director General Sugato Sen told reporters here.
These countries cannot make payments in dollars and that is impacting the trade with these nations, he added.
"So we have asked the Commerce Ministry to negotiate rupee trade with these countries. It is a long term bilateral thing and these countries also need to study it," Sen said.
Of the total automobile exports of around USD 8.86 billion in 2015-16, Africa alone accounted for 30-35 percent of the total overseas shipments in value terms.
With issues like falling prices of crude and commodities, African countries are facing issues with dollar payments.
Countries like Algeria, Nigeria and Morocco are among the major export markets for domestic automobile industry.
SIAM has also approached the Commerce Ministry for FTA's with more Latin American nations to safeguard exports to these markets.
"These countries are inking FTAs with various competitors like South Korea, Japan and the US and as a result due to the enhanced competition our position is getting eroded. So we are seeking FTAs with more countries in the continent," Sen said.
In the past few years there has been a clear shift in automobile exports from developed regions like EU to developing markets like Africa, Latin America and ASEAN region, he added.
Automobile exports from India to Latin America stood at USD 91 million in 2004-5. It grew to USD 1,044 million in 2013-14.
ASEAN, Africa and Latin America are the fastest growing markets for automobile exports from India since 2004-05.
However, the country's exports to SAARC nations have been declining which is a cause of worry, Sen said. PTI MSS RKL .