Hyundai's exports may be hit by trade pact - report

A newly launched ''Verna'' car is on display during a news conference of Hyundai motors in New Delhi in this September 2006 file photo.

MUMBAI (Reuters) - The Indian arm of Korea's Hyundai Motor Co is worried that a free trade agreement (FTA) between the European Union and South Korea would threaten its exports to Europe, the Economic Times said on Tuesday.

The proposed trade pact will allow Korean carmakers such as its parent Hyundai and Kia Motors to ship their cars to Europe without paying the 10 percent duty levied on imports, threatening to erode the competitive advantage enjoyed by Indian carmakers in their largest export market, the report said.

Hyundai Motors India exports half the cars it makes in India and is the largest exporter of cars from the country.

The company has already asked the Indian government to take steps to protect its interests, the report said.

"The government needs to act fast to take some decisions on car exports. A 6.5 percent import duty that Indian carmakers face in Europe will make it virtually impossible to compete with Korea," the paper quoted Hyundai India's managing director and chief executive, H.S. Lheem, as saying.

Hyundai's subsidiary Kia Motors sells two hatchbacks in Europe that compete with the Indian unit's i10 and i20 in the compact segment, the paper said.