From the President's Desk
Localisation policies (MOUs) will have to be removed latest
by September 2000. While this does pose a threat to the
industry, all is not lost. We have enough time even now
to gear up to face free global competition. Bound rates
of tariff of 40% are valid till 2005 and there should
be no need for Government to reduce tariffs below the
Bound rates if it is not in the interest of the domestic
manufacturers. ACMA's strong plea to Government would
be not to hurry up with tariff cuts in the component industry
At the outset, I would like to
thank you for reposing confidence in me and electing
me as President, ACMA for 1999-2000.This is my
first communication with the membership at large
and I would like to start off by outlining ACMA's
views on Government policy specially as the WTO
deadlines are fast approaching.
Over the past one or two issues,
the ACMA President has communicated to you regarding
the impact of WTO on the component industry which
may bring up a future regime without a Government
driven "localisation policy" and free
import of vehicles including second hand vehicles.
tariffs can only buy us some more breathing time. We
will have to accept reductions in tariff over a period
of time and prepare to face competition from cheap imports.
In the long run, the only incentives for local value
addition can be subsidies related to Research &
Development. Companies need to take not of this and
start giving more attention to R&D right now.
Another issue which has concerned everybody
in the component industry recently is the subject of
global Copyrights and Patents.
Traditionally, the Indian industry
has thrived on its expertise in reverse engineering.
We are probably the best "reverse engineers"
in the world along with the Koreans and Taiwanese. Over
the decades, patent and copyright laws were seen as
an impediment to internal competition and as encouraging
monopolistic forces. At that time, it was in our National
interest to ensure that no single organisation took
control of the market under the protection of Patent
or Copyright Laws. However, the emerging world order
has overturned all our traditional perceptions and beliefs
and today, each and every one of us will have to conduct
our business within the boundaries of internationally
Our reverse engineering approach will
need to be somewhat tempered. The international laws
have become strict and stringent, often making such
activity unlawful and punishable, particularly, in cases
where the designs or technologies have been patented
or copyrighted by the original owners of the technology
anywhere in the world. Neither the product nor the design
can be copied without a legal agreement with the original
owner. Whenever such cases arise, it is often due to
ignorance of international laws or inadequate understanding
of the potency of these laws.
No doubt, reverse engineering will
remain an effective method for aftermarket exports.
However, companies, now need to be more aware of their
legal positions. They will have to make a more critical
assessment of their own product or process and ensure
that they have legal rights to sell the product or technology.
The international law is very unforgiving and can take
extreme penal actions, if invoked - justified or unjustified.
The sooner the industry becomes savvy
on this issue, the quicker will we be able to integrate
into the world economy.