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Old 30th July 2012, 13:43   #16
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Default Re: 10% Import Duty on BMW and Porsche

This is how it will span out

Car price: 30,00,000
Discount: 10% = 3,00,000
Ex-showroom price: 27,00,000
India Unexplainable duty charges: 15%
Education Cess: 10%
Service Tax on Education Cess: 10% of the above 10%
VAT on the Service Tax of the Education Cess: 12.36%

Final price: Higher than the original price of the car if import duty was 100%! voila!

Sorry. There is nothing that our government doesn't tax and I am pretty sure that less than 10% of anything ever goes into something useful. Not to make this a political statement, its been the way with all governments, current and previous.

While I am all for cutting the import duty and whatnot, I just think these are cosmetic measures to paint over the underlying problems in our industry, the general economic climate and financial strength of the economies involved.

(disclaimer: written in jest. Please do not take offense or try to validate tax%)

Last edited by Mad Max : 30th July 2012 at 13:44. Reason: Adding disclaimer
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Old 30th July 2012, 14:03   #17
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by narayan View Post
Of course there would be some short term heart burn for SIAM when models priced similar to ones from MSIL, HYUNDAI M&M etc are imported and sold but the 10% duty and higher cost of manufacture in Europe should ensure these cars are pricier than their Indian competition which anyway should hopefully up the quality ante for the locally manufactured cars as well

all in all - good for the car buyer- hope fully the infrastructure also catches up.
There might be a significant migration towards the Europeans, at least in the urban areas on account of higher brand image and overall perceived value etc.
It will have another impact over time - the used car market pricing for the European cars will become more rational than it is now, which in turn will drive the other prices down too.
But as you said all this badly requires infrastructure to keep pace!! There lies the rub!
India is not really qualified as a country to be a car based society yet, unlike the US. Our population itself ensures that we can never be a fully car based society.
We badly require public transport systems too, to work as well as first class satellite towns and cities to live in and do business from.
But all this has been said often enough, to no avail!
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Old 30th July 2012, 14:24   #18
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Default Re: 10% Import Duty on BMW and Porsche

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Originally Posted by shivshanker View Post
You may have to pay just 10% duty on Porsche and BMW; India in talks with EU to slash import duty.

The above news caught my attention while glancing the online edition of Economic Times today.

At first i was impressed that the our Govt. is coming out of the closet. But if I re read the article, I feel that we are not doing justice to the local Indian population.

Rather than making helping the masses and provide jobs to the common Indian public, cannot understand as to why is our Govt. so keen on pleasing the EU.

The net result would also mean a loss of 50% Import Duty on 2.5 Lakh cars over the next few 5 Years.

I am for keeping the import duty high on all EU cars so that these car manufacturers seriously consider setting up production base in India.

Do any other Bhpians share my views.?
Shiv - your point is valid on the fact that there is a per se loss of import duty but consider my below arguments

1) Presently due to the high duties - if 100 cars are imported - what is the TOTAL duty earned ? compare this with the TOTAL duty earned if the number of cars imported goes up in light of the lower duties

2) The local production base Vs overseas factory argument - while India already has a large car manufacturing base, we also need to be clear whether our facilities in terms of infrastructure, policies, vendor base and their quality thereof etc are acceptable to ALL GLOBAL MANUFACTURERS to set up shop. Hence it would be unfair to FORCE some one to set up a factory without keeping the basics right. However in the interim, i dont see any harm in giving the customers choice by lowering duties

3) Lastly please note that this arrangement is not one sided. our babus are negotiating for various other faciltiies from the EU by way of more work visas and opening up of their market for the Indian IT industry. Please note that this gives a greater benefit to the economy than the IMPORT DUTIES.

for e.g
if the Govt collects Rs100 as import duties, its anybodys guess how much of that will find its way to the common man by way of various schemes/investments of the Govt

if, lets say, the IT industry gains, it would result in direct spending in the economy by way of higher salaries, greater spending power and the money multipler effect ( hope you get the drift )
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Old 30th July 2012, 15:27   #19
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Default Re: Prices of Imports set to come down drastically !!

A lot of these laws were set up when we did not have an 'open' economy. At one time the duty on an Imported Car was 320%.

They need to be done away with. By and large the EU is somewhat more honest in their restrictive policies that the US (see the latest Drug Licensing noise). Let is hope. The Govt tends to oscillate between an open (1991) and closed mindset. At the moment we seem to be in the closed phase.
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Old 30th July 2012, 19:44   #20
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Default Re: Prices of Imports set to come down drastically !!

Import duty cut will give people value for there money.....i think its would be a good change. But is am not sure how its going to impact our currency value.
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Old 30th July 2012, 20:07   #21
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Default Re: Prices of Imports set to come down drastically !!

With this qouta system in effect how will this trickle down to the end consumer? Every brand will be fitting to get maximum qouta, further every dealer of the brand will fight for the same and lastly every customer will struggle to get the same from the dealer. At the end it will land up in the hands of a select few (most likely politicans yet again) unless they come up with a better plan of dividing the total cost saved in the qouta across all imports of the year/model.
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Old 30th July 2012, 20:18   #22
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by Sahil View Post
With this qouta system in effect how will this trickle down to the end consumer? Every brand will be fitting to get maximum qouta, further every dealer of the brand will fight for the same and lastly every customer will struggle to get the same from the dealer. At the end it will land up in the hands of a select few (most likely politicans yet again) unless they come up with a better plan of dividing the total cost saved in the qouta across all imports of the year/model.
I would think 40000 is a fairly good number? How many cars do all the European brands import together annually (considering most of them do CKD already)?
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Old 30th July 2012, 20:22   #23
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Default Re: Prices of Imports set to come down drastically !!

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I would think 40000 is a fairly good number? How many cars do all the European brands import together annually (considering most of them do CKD already)?
You cant really judge by the historic sales of CBU's, they have never been high sellers due to their high pricing. For example an A8 might sell 200 cars a year at 1cr pricing but with this duty cut the price may become 60 odd lakhs then the sales might climb to 1000 cars. Filling the 40,000 qouta is not a hard job given the price slashes it will bring.
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Old 30th July 2012, 20:25   #24
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by Sahil View Post
You cant really judge by the historic sales of CBU's, they have never been high sellers due to their high pricing. For example an A8 might sell 200 cars a year at 1cr pricing but with this duty cut the price may become 60 odd lakhs then the sales might climb to 1000 cars. Filling the 40,000 qouta is not a hard job given the price slashes it will bring.
Which is probably why there is a increment to that number every year. Although, I have to agree with you, the numbers as planned right now may not be sufficient to make this pricing policy transparent to all. There will be a might is right situation on who gets the discounted prices.
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Old 31st July 2012, 01:41   #25
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Quote:
Originally Posted by Sahil

For example an A8 might sell 200 cars a year at 1cr pricing but with this duty cut the price may become 60 odd lakhs then the sales might climb to 1000 cars. Filling the 40,000 qouta is not a hard job given the price slashes it will bring.
Yes I agree with the A8 example, now what stops Audi from selling the A1 @ 10 lakhs or Citroen C3 or VW golf. Each of these can sell 5000 cars a month I guess. I am sure Peugeot, Fiat, Renault, Seat, Ford (Europe), GM (Europe) and others have dozens of models that all of a sudden make sense for India. Then the 40,000 quota would run out in a couple of weeks!!!
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Old 31st July 2012, 13:50   #26
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This thread and the discussion got my hopes up! When is this going to be put into effect !?? I am still being told the import duty is the same as before in fact was told it has increased by 30% to 140% by Porsche along with their quote for the cayenne which has taken the price of the base 3l diesel cayenne price to over 1cr which is ridiculous !! I don't know If I will ever get myself to buy a luxury import or cbu knowing I'm paying more than double what most people in the developed world with GOOD ROADS and infrastructure pay! Why why why !!
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Old 31st July 2012, 14:59   #27
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Default Re: Prices of Imports set to come down drastically !!

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This thread and the discussion got my hopes up! When is this going to be put into effect !??
@cornkracker: I mentioned on the previous page. Wait until December for the policy to come into force. There could be some changes also by that time.
Do not expect any drastic benefits for automobile sector within one year. The reduction will be in a phased manner.
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Old 31st July 2012, 23:17   #28
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Default Re: 10% Import Duty on BMW and Porsche

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Originally Posted by shivshanker View Post
You may have to pay just 10% duty on Porsche and BMW; India in talks with EU to slash import duty.

I feel that we are not doing justice to the local Indian population.

Rather than making helping the masses and provide jobs to the common Indian public, cannot understand as to why is our Govt. so keen on pleasing the EU.

The net result would also mean a loss of 50% Import Duty on 2.5 Lakh cars over the next few 5 Years.

I am for keeping the import duty high on all EU cars so that these car manufacturers seriously consider setting up production base in India.

Do any other Bhpians share my views.?
i totally agree this would put more burden on tax paying people like a us as this would increase the fiscal deficit, one of they key point is easing the norms for visa, why is Indian govt hell bent on sending people outside this country?!? rather they should have asked to ease the outsourcing policies so that more jobs can be generated here...if it is going to pass anyways i would love to see other european cars just besides premium brands getting the benefit, would love to own a Bravo
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Old 1st August 2012, 00:14   #29
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Default Re: Import duty on European cars to be slashed to 10 per cent?

I think these kinds of moves with promises of cheaper 'anything' to end consumers where pricing benchmarks have already been set are simply deceptive. Cars are priced according to what the market will pay.

Volume is a function of price, not the other way round, so well priced cars will generate volume, high prices will obviously limit volume. Some car makers have decided to adopt a higher profit margin model as reflected in the disparities in cars prices here and abroad. Taxes play a role but other countries not only have taxes but extremely high costs of business; labour, general business, marketing and environmental costs are just a few things that dramatically increase costs.

Even with low duty we will still pay top dollar and this will simply go towards fattening the margins under various guises. So this does not benefit local consumers or the country, only global auto majors.

What we lose is huge employment that comes from local manufacturing, the addon and demand effect that reasonably well paid employment generates in the economy and the auto auxiliary industries that serve these manufacturing hubs around the country. This is what drives internal employment and growth in the economy.

It is protectionist but the west is not protectionist only when it doesn't affect their interests, when it does like in Indian technology workers then we quickly see the walls coming up. We have to do what's good for us.

Last edited by raul : 1st August 2012 at 00:16.
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Old 1st August 2012, 10:17   #30
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Default Re: 10% Import Duty on BMW and Porsche

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Originally Posted by shivshanker View Post
....
But if I re read the article, I feel that we are not doing justice to the local Indian population.

Rather than making helping the masses and provide jobs to the common Indian public, cannot understand as to why is our Govt. so keen on pleasing the EU.
...
Not disagreeing with you. Eventually, there would be some hands gaining personally

But look at the brighter side. The safety and performance standards are comparatively high on an European manufactured car than one manufactured in India. Won't it trigger a healthy competition by forcing Indian automobile manufacturers to use quality materials, improve on R&D, increase the safety/polluting/performance standards etc? Or on the other had, Indian automobile manufacturers have more cars to export to international market!
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