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Why does Piyush Goyal think that Hyundai and Kia abuse the FTA, causing India to have a trade deficit?


Union Trade and Industry Minister, Piyush Goyal, said in his speech at the Asian Economic Dialogue that two Korean carmakers, Hyundai and Kia, have caused India to run a trade deficit. billions of dollars. The minister said that India has a Free Trade Agreement (FTA) with Korea and other countries and using the provisions in it, Hyundai and Kia have freely imported components for their cars. from companies of origin in their own and other countries, resulting in such consequences. trade deficit for India.

Via:
Car table HT

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Update on:
March 25, 2023, 13:11 pm

Union Minister Piyush Goyal has alleged that Hyundai and Kia cost India billions of dollars in trade deficits by abusing the free trade agreement between India and South Korea.  (PTI)
Union Minister Piyush Goyal has alleged that Hyundai and Kia cost India billions of dollars in trade deficits by abusing the free trade agreement between India and South Korea. (PTI)

The minister has emphasized that car manufacturers such as hyundai and Kia caused India to have a trade deficit of billions of dollars due to abusing the free trade agreement between India and Korea. “The Korean auto industry, Hyundai and Kia in particular, are clearly two of the laggards. They have enjoyed the benefits of our free trade agreements with Korea and Japan. and continue to import indiscriminately,” Goyal said. He added that a small investment of half a billion or a billion dollars has cost India dearly in terms of billions of dollars in trade deficit that the aforementioned auto companies have caused India directly with Korea or other countries.

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Goyal argues that Korean companies such as Hyundai and that motivated by a strong nationalist spirit that drives them to purchase raw materials from suppliers from their country of origin instead of India, which can supply them with key raw materials such as finished steel . The minister explained that these companies prefer to buy raw materials they produce locally, even though those raw materials cost more than products made in India.

However, despite considering the minister’s comment, these two car manufacturers are not circumventing or breaking any rules or laws by engaging in such free import of components from companies. their mother instead of producing them in India. In addition, the Minister also did not mention the export tax revenue in US dollars to enrich the foreign exchange reserves of India by these two car manufacturers.

First published date: March 25, 2023, 13:11 pm IST

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