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View Poll Results: The govt. is still taxing us 120 % or more on imported cars because
To contain the number of vehicles from drastically increasing on our already congested roads and thus indirectly preventing pollution and parking space problems. 8 5.71%
To still further protect our domestic players to keep them competitive and provide adequate job opportunities by encouraging foreign players to set up factories here in India. 98 70.00%
It is a very good source of income for our govt. as there is a boom in the automobile industry currently, even during recession (only in India). 43 30.71%
Govt. does not want to make cars like Audi,BMW and Benz affordable to the common man, instead allow it to be bought only by the very rich and affluent. 15 10.71%
Others(Please Specify) 8 5.71%
Multiple Choice Poll. Voters: 140. You may not vote on this poll

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Old 21st May 2013, 14:06   #61
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by 999 View Post
hi Nithin,
2 things. Subsidies and import taxes are 2 different things normally. If the country gives a subsidy to export stuff then they can be clubbed together. Otherwise they are mearly to support the lower income bracket or encourage a few specialized industries.
Case point PDS (public distribution system), Urea and other fertilizers, farming loans etc. These are there for a reason. Developed countries do it as well, but more to promote exports like wheat cultivation in US, so that exports remain competetive. How in earth can you believe that American wheat after travelling halfway across the world to India is cheaper than the locally grown one, a few years ago?
why are you buying an Indianized inferior product at the first place? If you are comparing with the same brand international product, then the company is to blame for, not the taxes. Choose the best. Nobody stops you from that other than the "phoren" mindset.
By the way of higher taxes, government is earning from the ego, of the status concious Indian in this case.
Regards
Increasing the taxes for imported/foreign made products is as good as favoring the local brands which are not subject to these taxes. The local goods in India are quite poor in quality (unless its a foreign collaboration). They don't do much of R&D or have good after sales products. A Classic case would be HM's Ambassador. Everything was done to prevent foreign car manufacturers from entering the Indian market just to favor HM, Premier etc. It was clearly known that if the foreign car makers entered the Indian market, nobody would by the Amby's or premiers - which is eventually what happened. Have HM or Premier done anything to improve their products? The answer would be NO.

On the other hand, be it an imported car or any goods., they are manufactured with certain specifications and are strictly adhered to. The very reason why people buy and use them. Quality, feature-richness, reliability are just to name a few. However, because they have to start their plants in India (to avoid paying higher taxes), thus again, resulting in poor quality products as nobody here gives preference to quality but quantity.

So instead of giving any subsidies or tax advantages to the Indian companies, they should develop better products to stay competitive - there is no other way! This is not just true for cars but every other product.
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Old 21st May 2013, 14:43   #62
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by nitinbose View Post
Increasing the taxes for imported/foreign made products is as good as favoring the local brands which are not subject to these taxes. The local goods in India are quite poor in quality (unless its a foreign collaboration). They don't do much of R&D or have good after sales products. A Classic case would be HM's Ambassador. Everything was done to prevent foreign car manufacturers from entering the Indian market just to favor HM, Premier etc. It was clearly known that if the foreign car makers entered the Indian market, nobody would by the Amby's or premiers - which is eventually what happened. Have HM or Premier done anything to improve their products? The answer would be NO.

On the other hand, be it an imported car or any goods., they are manufactured with certain specifications and are strictly adhered to. The very reason why people buy and use them. Quality, feature-richness, reliability are just to name a few. However, because they have to start their plants in India (to avoid paying higher taxes), thus again, resulting in poor quality products as nobody here gives preference to quality but quantity.

So instead of giving any subsidies or tax advantages to the Indian companies, they should develop better products to stay competitive - there is no other way! This is not just true for cars but every other product.
The tax regimes have been reduced systematically. Premier was not Indian, but licensed manufacturer of FIAT (no R&D in India). HM ambassador came from Morris oxford III. So not exactly Indian. I can give you a few examples of indian companies like VGUARD, kirloskar etc who are indian and still best in the field. Mahindra is another good example. Classic case of improvement will be Bajaj motorcycle.
Before suzuki left Hero group, Bajaj was not a name to reckon due to strong R &D of Suzuki. But they invested in it and look where they stand in the 2 wheeler market. When suzuki is gone time will tell where Hero group is headed.now if was a free market, Bajaj would have been history now. This is exactly the case supported by taxes. Again if a car is locally manufactured and even if it is a RR, taxes are same as any other car in that bracket.

Last edited by 999 : 21st May 2013 at 14:46.
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Old 21st May 2013, 15:34   #63
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by 999 View Post
Classic case of improvement will be Bajaj motorcycle.
Before suzuki left Hero group, Bajaj was not a name to reckon due to strong R &D of Suzuki. But they invested in it and look where they stand in the 2 wheeler market. When suzuki is gone time will tell where Hero group is headed.now if was a free market, Bajaj would have been history now. This is exactly the case supported by taxes. Again if a car is locally manufactured and even if it is a RR, taxes are same as any other car in that bracket.
Oh please, Bajaj Auto and specifically Rahul Bajaj was the worst case to give example of protectionism/crony capitalism. Infact Rahul Bajaj was the biggest and most vocal critic of liberalisation when it was being enforced in 1991, stating that Indian industry would collapse under the foreign onslaught. If he held on to his/his kind of thoughts, we would still be seeing Fiat/Ambassador/Bajaj scooter on the roads and the Doshi/Bajaj/Hinduja families would be laughing their way to the banks.
It is when Bajaj got a kick on their backside and saw their empire dwindling away because of open markets, they got their act together and turned into a world class company that they now are.
I support govt taxing direct imports and encourage local manufacturing, but the example used in this case was of a person who was the worst face of protected markets.
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Old 21st May 2013, 15:55   #64
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Default Re: How do we encourage building factories here ??

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Originally Posted by stanjohn123 View Post
OK I honestly don't know about this so i need your help guys. How actaully would it encourage manufacturers from setting up plants in India. Do you mean to say Manufacturers who build cars in India have a substantial tax reduction than direct imports ?? If so what is the % as tax that we indirectly pay for these Indian built foreign cars ?? It has to be way less than 120 % for sure but how much exactly will the tax's reduce in that case ??
Well this is what the dealers tell me: Importing a car directly attracts the highest tax (CBU) whereas if its brought as a kit and assembled (CKD), the tax would be lesser. If there's a manufacturing plant in India, many of the parts can be sourced locally (raw materials or outsourced) and the cost and tax still goes down. The local manufacturers being Indian companies are less liable to taxation.

These are not my words but from various non-Indian vehicle dealers.

It is a known fact that an imported car has a much better build, reliability and quality as compared to when its assembled/made locally. The Indian manufacturers on the other hand simply try to make something that they can sell at a less cost with lesser regards to quality, after-sales-service, ergonomics, safety etc.

I have been repeatedly quote the above from dealers when I ask them why are their vehicles priced higher as compared to the Indian products

Last edited by nitinbose : 21st May 2013 at 16:00.
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Old 21st May 2013, 16:46   #65
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by ashlil View Post
How come people buy iPhone 5 (made in China), Nikon D600 (made in Thailand) and Sony home theatre (made in China) with pride? So, why not made in India Lambo?
There is one big reason people are willing to risk on quality of consumer goods but not with automobiles. Would you be willing to travel in an aeroplane if you're told that the chances for the landing gear to work properly is 90-95%?

If an iPhone 5 stops working while you are using it, you'll probably lose a phone call.
If a Nikon D600 stops working while you are using it, you'll probably lose a picture or a video.
If a Sony home theatre stops working while you are using it, you'll probably not see the remaining movie.

If a Lambo stops working while driving it (even if driven at half the speed it is expected to be driven), I don't think the driver might live to tell the story.

Disclaimer: I'm not suggesting that a product made in one country would be better than another but just pointing out why people would be willing to take chances with certain things but not with others.
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Old 21st May 2013, 16:55   #66
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Default Re: Reason Behind the High Taxation on foreign Cars in India

The Govt. is surely doing this to protect the Automobile Industry players especially those who have invested in India and rightly so.

Also if indeed these duties do go. We do need to keep in mind that there are other taxes that are applicable even to domestic players.

Like for example Excise is applicable to a local player this would then be applicable to the imported vehicle in the form of a counter applicable duty. So the imported vehicles though they would get considerably cheaper for sure would not necessarily be available at the same price as they are available for abroad. After a customs duties drop below a certain level duty applicable to local levies like excise (which is applicable only on locally manufactured vehicles) would become applicable.

That said Vehicles like an XUV or Duster which are now seen as overall great value for money would no longer be VFM.

Local Manufacturing does need protection for atleast another 5 years. That said there should be a rationalizing of duties the current extent of difference between local manufacturing and SKD and CKD values is too high and will lead to local players not being sharp enough on their pricing.
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Old 21st May 2013, 17:40   #67
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by apachelongbow View Post
Oh please, Bajaj Auto and specifically Rahul Bajaj was the worst case to give example of protectionism/crony capitalism. Infact Rahul Bajaj was the biggest and most vocal critic of liberalisation when it was being enforced in 1991, stating that Indian industry would collapse under the foreign onslaught. If he held on to his/his kind of thoughts, we would still be seeing Fiat/Ambassador/Bajaj scooter on the roads and the Doshi/Bajaj/Hinduja families would be laughing their way to the banks.
It is when Bajaj got a kick on their backside and saw their empire dwindling away because of open markets, they got their act together and turned into a world class company that they now are.
I support govt taxing direct imports and encourage local manufacturing, but the example used in this case was of a person who was the worst face of protected markets.
That is what exactly I meant. When they saw that they will be screwed, they had to work up. But they had some time to do that. Do you think a company like bajaj would have existed if we didnt have protectionism? I am sure nobody will be happy to lose their comfort zone. Bajaj had to do that or die. So they did. That is also another reason why the controls should be lifted gradually in a phased manner.

Last edited by 999 : 21st May 2013 at 17:56. Reason: typo
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Old 21st May 2013, 20:47   #68
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Default Re: Reason Behind the High Taxation on foreign Cars in India

Protecting home-grown companies or bias towards local manufacturers is ok, if some of the benefits they enjoy are passed on to the end customers. In India’s case I doubt if that is happening. If they enjoy the benefits, they should be able to provide products which are at least 75% comparable to the Euro/Korean/Japanese counterparts, at a lower price point. This sadly does not happen. And it’s not that they don’t have the resources. For e.g.; Tata have access to world class technologies, but how much of those are passed on to lower level Tata branded cars?

Just for comparison, take the case of Malaysia. They heavily promote locally manufactured Proton. From a quality, build and refinement point of view, they are pretty much like the Tata or M&Ms, but their cars are sold at a much lower price compared to the competition. For e.g.; A Civic equivalent Proton model will cost probably 20-30% less than a Honda Jazz.
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Old 22nd May 2013, 01:48   #69
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Default Re: Reason Behind the High Taxation on foreign Cars in India

Are we right in thinking that we should lead in every field?
We are leaders in tobacco, silks, agriculture, software, healthcare, bicycles, politics, corruption, etc.
Do we have to be the no 1 producer of automobiles too?
Hero is the world's largest 2 wheeler manufacturer in the world. But is the SS100 and its various clones the best motorbike?
If we price the nano at Rs.1L and price the next cheapest car at 20L (Alto with 1000% duty) Nano would soon be the largest selling car in the world.
But is that really a sign of success?
The govt. should not try to rationalize everything. You want to suppress foreign manufacturers, tax them absurdly.
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Old 22nd May 2013, 06:20   #70
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Quote:
Originally Posted by vb-san View Post
Protecting home-grown companies ....
I differ a bit on the 'protecting home-grown companies'. Government is infact not protecting Indian manufacturers. If that was the motivation, Government could very well have implemented a policy to tax cars manufactured by 'Indian' companies and those by 'foreign companies' differently. We know that Indicas and the XUVs are taxed at the same rate as i20s and Dusters. (we all know that our government is very capable of such nepotism, case in point - Indian Airlines enjoying plenty of unfair advantages over other private operators)

Government is only creating an environment where there are incentives for a foreign company to invest in India, the incentive being ability to sell more through the taxation policy which is skewed in favor of local manufacturing.

And I also do not think Government is being pro 'Indian' companies. Government does lot let Tata import JLR vehicles at lower rates. So it is a blanket rule based on where a car is manufactured irrespective of ownership of the manufacturing company, which in my opinion is very fair.

Just noticed, in the poll, the percentages are adding up to more than 100%. Looks like there is a mistake there.

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Old 22nd May 2013, 07:29   #71
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by Sanjunair5 View Post
Just noticed, in the poll, the percentages are adding up to more than 100%. Looks like there is a mistake there.
Thats because of the checkbox style input, not the radio.
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Old 22nd May 2013, 10:31   #72
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by zenren View Post
There is one big reason people are willing to risk on quality of consumer goods but not with automobiles. Would you be willing to travel in an aeroplane if you're told that the chances for the landing gear to work properly is 90-95%?

If an iPhone 5 stops working while you are using it, you'll probably lose a phone call.
If a Nikon D600 stops working while you are using it, you'll probably lose a picture or a video.
If a Sony home theatre stops working while you are using it, you'll probably not see the remaining movie.

If a Lambo stops working while driving it (even if driven at half the speed it is expected to be driven), I don't think the driver might live to tell the story.

Disclaimer: I'm not suggesting that a product made in one country would be better than another but just pointing out why people would be willing to take chances with certain things but not with others.
Actually zenren, your disclaimer dismantles the entire argument you just made, as your argument assumes the hypothesis that products made in one country would be better than those made in another.

I am of the opinion that with technology transfer and supervision, a product will work as intended irrespective of the country it was produced in. Case in point: a mission critical product such as SU30MKI fighter jets.
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Old 22nd May 2013, 14:23   #73
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by ashlil View Post
Actually zenren, your disclaimer dismantles the entire argument you just made, as your argument assumes the hypothesis that products made in one country would be better than those made in another.
If you read my post again, you'll see that I was highlighting the risk that a customer takes with each of the product you mentioned. It has got nothing to do with actual quality at the time of purchase. The chances of the product being faulty would be neither 0 nor 100%, which would be the case if we know for sure that a product made in one country is always inferior.

There is a difference between perception and reality. The decisions that a potential customer makes is purely based on his perceptions, which may or may not be close to the actual reality. If a product is indeed faulty, that's where the risk factor and the impact I mentioned comes in. No customer would know it before purchasing whether the product he is going to buy would be perfectly working or faulty. No one would go for a product if he knows that it would be 100% faulty before he makes the payment.
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Old 23rd May 2013, 11:58   #74
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by singh.amrit View Post
OT: Because I do not want mayawatis 4000 cr worth to double, I do not support such taxes.

The point being that the taxes are justified as long as they are being put to good use.
not in the current manner.
exatly.. the taxes are only being used to fill pockets and not for the development of the country

Quote:
Originally Posted by Nitronium View Post
If the market prices mimicked the pricing in countries abroad, we'd be in deep trouble.

1) say, the A8 costs about 37lacs in the US. If that were the price it was sold at here, then you can imagine the condition our already-packed roads would be in. Those driving corollas would have A4s and inflation would well....inflate.

2) The govt. as it is subsidises petrol for our country. Removing import restrictions means more powerful engines which in turrn spells more fuel consumption. In times where there are violent protests over the raising of petrol prices by a few rupees, can we be so irresponsible as to burn it up without due deliberation?
well, as rightfully said before, your argument saying an A8 costing 37Lac would enable more people from buying it and congest the "already packed roads" doesnt make sence cause for 37 lac you could buy about 25 nanos. so are you trying to say 1 A8 will congest roads more than 25 nanos ?

secondly subsidised fuel in this country ? you are kidding right ?

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Originally Posted by aerohit View Post
Majority of people in the country are obsessed with anything that is phoron.

If there was no tax, your roads would be clogged with Land Cruisers, and "Accidents in India" thread would be flooded with such cars.

I dont think we want that.
whether you drive a land cruiser or a tata sumo if you lose control you lose control. the tata sumo doesn't make it any safer because its less powerful. infact the stability of a land cruiser at 80-100 would be leaps and bounds ahead of a sumo at the same speed.. so what are you trying to suggest here ? and its not like the "Accidents in India" thread is empty right now.. its full of tempos and qualis and all kinds of vehicles so what your trying to say is really not justified.

secondly the licensing department in this country is another joke.. "pay money get license" no emphasis on skill, safety, knowledge of rules etc. so what else do you expect.

Quote:
Originally Posted by stanjohn123 View Post
Why can't India adopt the same strategy to make it more competitive for our local manufacturers ? Isn't it high time they get out from their comfort ( Lazy ) zone?

TATA's , Mahindra's and Maruti are getting an unfair advantage due to the heavy tax structure on imported cars.
well said .

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Originally Posted by nitinbose View Post
Increasing the taxes for imported/foreign made products is as good as favoring the local brands which are not subject to these taxes. The local goods in India are quite poor in quality (unless its a foreign collaboration). They don't do much of R&D or have good after sales products. A Classic case would be HM's Ambassador. Everything was done to prevent foreign car manufacturers from entering the Indian market just to favor HM, Premier etc. It was clearly known that if the foreign car makers entered the Indian market, nobody would by the Amby's or premiers - which is eventually what happened. Have HM or Premier done anything to improve their products? The answer would be NO.

On the other hand, be it an imported car or any goods., they are manufactured with certain specifications and are strictly adhered to. The very reason why people buy and use them. Quality, feature-richness, reliability are just to name a few. However, because they have to start their plants in India (to avoid paying higher taxes), thus again, resulting in poor quality products as nobody here gives preference to quality but quantity.

So instead of giving any subsidies or tax advantages to the Indian companies, they should develop better products to stay competitive - there is no other way! This is not just true for cars but every other product.
couldn't agree with you more.. the way i look at it.. is if they are not in the same league why make them compete..!!
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Old 24th May 2013, 01:07   #75
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Default Re: Reason Behind the High Taxation on foreign Cars in India

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Originally Posted by vb-san View Post
Protecting home-grown companies or bias towards local manufacturers is ok, if some of the benefits they enjoy are passed on to the end customers. In Indiaís case I doubt if that is happening. If they enjoy the benefits, they should be able to provide products which are at least 75% comparable to the Euro/Korean/Japanese counterparts, at a lower price point. This sadly does not happen. And itís not that they donít have the resources. For e.g.; Tata have access to world class technologies, but how much of those are passed on to lower level Tata branded cars?

Just for comparison, take the case of Malaysia. They heavily promote locally manufactured Proton. From a quality, build and refinement point of view, they are pretty much like the Tata or M&Ms, but their cars are sold at a much lower price compared to the competition. For e.g.; A Civic equivalent Proton model will cost probably 20-30% less than a Honda Jazz.
I have to agree with VB san here. As far as our money goes into buying car's in India. Only 2 entities really benefit.Our local manufacturer's and Our government and neither of them have done anything in return for us the customers.
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