Commerce minister RK Hegde told the Lok Sabha on Friday that only two out of six foreign joint-venture firms which had signed memorandum of understandings for setting up facilities for passenger cars in 1995 could achieve their export projections. These two firms are Mercedes Benz India Ltd and General Motors India Ltd. Directorate General of Foreign Trade director general NL Lakhanpal said automobile firms which set up shop three years ago must fulfil their export obligation in 1998. In other words, firms which had gone for completely knocked down/semi-knocked down kits imports in 1995, would have to fulfil their export obligations by the year-end.

Car firms which will sign fresh memorandum of understandings this year under revised policy will be allowed a three-year moratorium to fulfil their exportobligations.

The directorate had, earlier, asked the Central Board of Excise and Customs (CBEC) to stop all import consignments of completely knocked down/semi-knocked down kits for cars till the manufacturers sign memorandum of understandings with the government. Sources said the directorate had information that automobile manufacturers were importing completely knocked down/semi-knocked down kits in the guise of components through their import licences.

"The excise board has, in turn, written to customs authorities not to clear import consignments of kits," they said. Replying to a question in the Lok Sabha, the minister said Daewoo Motors India, Mahindra Ford and other companies had expressed their inability to fulfil their export obligations owing to high excise and custom duties.

Hegde said if the stipulated conditions in the memorandum of understanding were not fulfiled, further import licences could be denied to such companies.The new policy, which was announced in 1997, stipulated that all thesecompanies would sign fresh memorandum of understandings committing themselves to achieving a broad neutralisation of foreign-exchange spent on for importing components, he said.