Car companies for rupee route to Africa

The Indian automobile industry has asked the government to consider a rupee-based payment mechanism for trading with African nations as they face a major hurdle in dollar-denominated payout.

African nations including Algeria, Nigeria and Morocco among others are among the major export markets for the Indian automobile industry. However due to a fall in commodity and crude oil prices many African nations are facing problem in dollar payments.

“We have approached the commerce ministry for rupee trade with the African countries as we are facing a challenge in dollar trade in these big export markets like Alge-ria and Nigeria,” said Society of Indian Auto-mobile Manufacturers (SIAM) deputy director- general Sugato Sen.

He said these countries cannot make payments in dollars and that is impacting the trade with these nations. “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,” said Mr Sen.

Of the total automobile exports of around $8.86 billion in 2015-16, Africa alone accounted for 30-35 per cent of the total overseas shipments in value terms.

In the past during the US sanctions on Iran, India had developed a rupee-dominated trade mechanism with the middle-eastern country.

Indian oil refiners settled 45 per cent of Iranian oil payments by depositing rupees in Tehran’s commercial banks’ acco-unt with India’s UCO Bank. Iran used funds in the account to import other goods from the country including food, drugs, consumer products and auto parts.

Meanwhile, the automobile industry has also asked for negotiating free trade agreements (FTAs) with more Latin American countries like Chile, Peru and Colombia to boost and 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,” Mr Sen said.

He pointed out that in last 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.