VZCZCXRO3889
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHNE #2554/01 3571134
ZNR UUUUU ZZH
R 231134Z DEC 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 9009
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RHEHAAA/WHITE HOUSE WASHDC
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS SECTION 01 OF 02 NEW DELHI 002554 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD 
DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER/JGRIER 
TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT 
USDA PASS FAS/OCRA/RADLER/BEAN/FERUS 
STATE for SCA/INSB, EEB/TPP, EEB/MTA 
 
E.O. 12958: N/A 
TAGS: EIND ETRD ECON EINV IN
SUBJECT: Auto Industry, GOI on Standards and Remanufacturing 
 
REF: NEW DELHI 2445 
 
¶1. (SBU) Summary:  On December 15, Dilip Chenoy, Director General of 
the Society of Indian Automobile Manufacturers (SIAM), told Econoff 
and Econ Specialist that he had drafted IndiaQs newly mandatory tire 
standards (reftel) and the standards would not affect any U.S. 
companies.  He expressed support for the U.S. position on 
international automotive standards, indicating GOI officials were 
more inclined to agree with the EU position.  Commerce Joint 
Secretary Amendra Khatua told Econoff on December 21 that the GOI in 
fact planned to propose another alternative text.  Chenoy said India 
is not ready to define remanufactured products and he did not 
believe the products are "as good as new," insisting that 
Caterpillar is the only U.S. company in the automotive sector that 
cares about this definition.  Chenoy and Khatua both indicated that 
the GOI is planning to wait until a remanufacturing definition is 
established as part of the World Trade Organization (WTO) Doha Round 
before considering implementing a definition in India. Khatua said 
it would then be implemented only in certain sectors at first.  He 
did acknowledge that entrenched opposition to remanufacturing stems 
from companiesQ efforts to keep out lower-priced imports.  SIAM is 
clearly the key Indian constituency on remanufacturing, but 
overcoming its strong opposition will be a hard won battle.  End 
Summary. 
 
Mandatory Tire Standards, WTO Automotive Standards 
------------------------ 
 
¶2. (SBU) Chenoy defended the new tire standards policy, saying that 
he had drafted it himself to ensure that all of the necessary 
exclusions were included.  He indicated that he had managed to delay 
the implementation for two and one-half years through drawn out 
consultations with the GOI, and now the standards only apply to the 
"aftermarket" (i.e., replacement tires, not those placed on new 
vehicles).  Chenoy pointed to an exception in the November 19 GOI 
notification for tires sold to "Original Equipment Manufacturers" 
(OEMs), explaining that U.S. companies only export tires to India 
for use in production of new vehicles.  He opined that Goodyear was 
the only U.S. company that might want to sell to the aftermarket, 
but the company is producing domestically and had agreed with the 
final version of the new tire standards.  Econoff expressed USG and 
U.S. company concerns about the limitations on accredited testing 
labs and uncertainty about when testing will be required.  But 
Chenoy insisted U.S. companies will not need to test their tires, 
offering to explain this to any interested USG officials. 
 
¶3. (SBU) Chenoy said the domestic tire manufacturers, which had 
pushed for stricter standards, had boycotted a session that he held 
to discuss the standards.  They were unhappy that he had watered 
them down.  But Chenoy said the standards still deal with the main 
problem, which is the aftermarket, where the majority of low-quality 
tires ae sold in India.  He said the law is aimed specifically at 
imports from Thailand and China.  Chenoy also explained that Indian 
industry supports the U.S. position on automotive standards -- 
including a 1998 text submitted to the WTO Technical Barriers to 
Trade (TBT) committee, while GOI officials were more inclined to 
agree with the EU position, based on a 1958 text.  Commerce Joint 
Secretary Amendra Khatua told Econoff on December 21 that the GOI in 
fact planned to propose an alternative text to the 1958 version. 
 
Remanufacturing Definition:  Waiting for Doha Round 
--------------------------- 
 
¶4. (SBU) Chenoy said the main problem with allowing trade in 
remanufactured ("Reman") goods in India is that the system is 
different from that which prevails in the United States: in the U.S. 
one self certifies, but in India homologation (i.e., granting of 
approval by an official authority) is practiced.  When the GOI 
certifies a product, the company becomes free from liability.  There 
is no one to test and certify Reman products in India, he added. 
Chenoy said no other countries use Reman definition and all but the 
United States are against Reman trade.  Noting that the WTO had 
already established a Reman work plan, he said it would be necessary 
for an international organization, such as the WTO, to come up with 
such a definition, which India would adopt as part of the Doha 
Round.  Chenoy said Caterpillar is the only U.S. company in the 
automotive industry that really cares about this issue; General 
Motors, Ford, and Chrysler do not use Reman.  He expressed a firm 
belief that there is no such thing as "good as new," as companies 
describe their Reman products.  All products in India that are 
 
NEW DELHI 00002554  002 OF 002 
 
 
second hand should be licensed, so that used equipment is not dumped 
in India.  Chenoy advised that Caterpillar stop insisting on a Reman 
definition and just call its products by another name.  He said that 
a lot of companies in India do Reman, but they do not call it that. 
When Econoff asked whether a tour of Reman facilities in the United 
States would be useful to SIAM, Chenoy indicated that he and Senior 
Director Sugato Sen (who joined the meeting at the end) had 
participated in innumerable events on Reman and had all of the 
information that they needed. 
 
¶5. (SBU) Commerce Joint Sectary Amendra Khatua told Econoff on 
December 21 that the Ministry of Heavy Industries has nothing to do 
with IndiaQs remanufacturing policy.  [Note:  Minister of State for 
Heavy Industries Arun Yadav indicated, during a speech at a 
September 18 Reman seminar, that his ministry was working on a 
remanufacturing policy that would take four-six months.  But 
Ministry of Heavy Industries Joint Secretary Ambuj Sharma told 
Econoffs on November 20 that the Ministry is not actually developing 
a reman strategy.  He maintained that YadavQs comments were taken 
out of context, saying the Minister really meant to point out that 
India already does a lot of reman since it happens naturally here. 
Sharma said the Commerce Ministry should be responsible for the 
overall strategy, as the Ministry of Heavy Industries is only 
responsible for that which relates to the auto industry (which he 
acknowledged is the industry most opposed to reman).  Shama did say 
his Ministry is working on an "end of life" policy for the 
automotive sector, which would start with a pilot project in 
Chennai. End note.] 
 
¶6. (SBU) Khatua said that the Commerce Ministry had proposed to the 
WTO that each country do its own Reman work plan, which would be 
implemented after a Reman definition is established in the Doha 
Round.  The GOI plans to only apply the definition to certain 
sectors, and then eventually the more reticent sectors (like 
automobiles) would find it impossible to continue opposing the 
definition for long.  Khatua said certain Indian trade associations 
are militant, as they simply do not want to face competition from 
lower-priced Reman imports.  Econoff tried to clarify, saying that 
it sounded like their plan was to introduce a definition for sectors 
that are not the most important ones to the United States, but 
Khatua brushed that idea aside.  He said the GOI had already begun 
stakeholders meetings on the reman work plan in Bangalore, Chennai, 
and elsewhere.  When Econoff also asked Khatua about a tour of U.S. 
Reman facilities, he too indicated that GOI officials already 
understand the importance of remanufacturing, adding that it was the 
private sector that could benefit from such a visit to the United 
States.  Econoff passed Khatua a flyer on a March 2-4 Reman 
conference in England ( 
http://www.remanufacturing.org.uk/pdf/events/ 0e27.pdf ); Khatua did 
not express much interest. 
 
Comment 
------- 
 
¶7. (SBU) It is quite clear that SIAM will not relent easily on 
remanufacturing, and the GOI listens carefully to this powerful 
organization.  KhatuaQs suggestion that a sector-specific approach 
towards Reman may work to incrementally soften the auto sectorQs 
stiff opposition, but it would not be a speedy process, especially 
considering the current plan to wait for implementation until after 
a Reman definition is established in the Doha Round.  The Ministry 
of Heavy Industries should play some role in developing a domestic 
Reman policy, and it is encouraging that the ministry is working on 
an end-of-life policy for the automotive sector.  Unlike Chenoy and 
Khatua, Joint Secretary Sharma actually expressed some interest in 
touring Reman facilities in the United States.  Perhaps this is one 
group that the USG could win over, but SIAM is obviously the key 
player.  Post will continue to press SIAM and the GOI to develop a 
Reman definition. 
 
ROEMER