Faced with the threat of increased competition from cheaper imports from Thailand and the Association of Southeast Asian Nations region under the proposed free trade agreement regime, the Indian automobile and automobile ancillary companies urged the government to build three special economic zones in the three automobile hubs -- Delhi, Bangalore and Pune.

"The Indian automobile ancillary sector, despite its high cost efficiency will not be able to compete with cheaper imports from Thailand and Asean if they are not given the sops that SEZ units enjoy," TK Balaji, managing director, Lucas TVS, said.

At the two-day Auto Trade Dialogue, jointly organised by the Ministry of Heavy Industries and Society of Indian Automobile Manufacturers, the Indian companies put forth their concerns to a delegation from the Asean.

In a study carried out by the Auto Components Manufacturers' Association, the cost of components manufactured in India, at current prices, was nearly 18-20 per cent higher than Thailand, just because of higher duties Indian firms have to pay on raw materials.

"This is the first dialogue of its kind, and we are confident that the government will come up with measures to provide us a level playing field," Hanumantha Charya, corporate economist, Hero Honda, said.