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Old 17th February 2011, 13:33   #1
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Default India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Hello All -

An update from the Motoroids website:

Indian and Japan have signed a historical free trade agreement to allow duty-free trade between the two countries. The comprehensive economic partnership agreement (CEPA) to open markets and reduce barriers on goods, services and movement of people between the two countries was signed between Commerce and Industry Minister Anand Sharma and Japanese Foreign Affairs Minister Seiji Maehara in Tokyo.
The ten year agreement will see 94% of the tariffs between India and Japan eliminated over a period of time.
While the exact details on the duty cuts are not available anywhere, auto parts are definitely a part of the free trade agreement. This means that auto components imported from Japan will attract very less or no duty. I had a look at the official document of the agreement as well, but found it too technical to understand. It, however included ‘Vehicles, aircraft, vessels and associated transport” and “Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof” as a part of the agreement.
Does that mean the duties on cars / motorcycles or their components imported from Japan will be reduced / eliminated? Does that mean the prices of Japanese cars and bikes in India will go down substantially?

All comments please!!
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Old 17th February 2011, 13:49   #2
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

The basic idea of a free-trade agreement is to eliminate dual-taxation on the same product, once by the exporters and again by the importers. Many times, the same company is the exporter and the importer of the same product and this is where the free-trade agreement helps businesses to trade.

So now I am guessing that the R1 should be cheaper by a lakh or so.

Prajwal
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Old 17th February 2011, 13:52   #3
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Can we get a new evo for 30 lac please, I promise, I will buy a new one this time.
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Old 17th February 2011, 13:54   #4
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Quote:
Originally Posted by prajwalkashyap View Post
The basic idea of a free-trade agreement is to eliminate dual-taxation on the same product, once by the exporters and again by the importers. Many times, the same company is the exporter and the importer of the same product and this is where the free-trade agreement helps businesses to trade.

So now I am guessing that the R1 should be cheaper by a lakh or so.

Prajwal
Why a lakh ? .There are selling it at 100% duty , almost 3 times the US price .
Base price is 5 lakhs or so . If the above is true for CBUs also , then we should get R1s at 6-7 lakhs .. Where can I do the down payment ?

Could some one find out if this for CBUs also ?
When is this coming into effect?
Do individuals also can import or only registered companies can take this route ?.

Last edited by black12rr : 17th February 2011 at 13:58.
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Old 17th February 2011, 14:32   #5
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

+1 on that , I assume if the import duties are waived off, we Indians can expect the R1's, Kizashi's & other Jap imports at nearly half the price that they are being quoted today.
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Old 17th February 2011, 14:38   #6
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

The bigger question is, will the manufacturers really pass on the benefits to buyers? May be to some extent. But they may not do that for the so called brand-building vehicles (such as Evo X or Kizashi).
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Old 17th February 2011, 15:03   #7
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

not really...
there is a similar agreement b/w India and Thailand and we don't see Toyota selling the fortuner cheap.
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Old 17th February 2011, 15:12   #8
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

All apologies here Rohan - I disagree

India is all about VOLUMES (my perception, BHPians please correct me if I'm wrong here), Japs would be more than Happy selling a 1000 R1's @ 5-6L annually rather than 10 @ 14L.

We have to look at the Germans, VW never thought their production pipeline is going to be choked by the ever surging Indian demands, but here we are, having read about the Vento waiting periods and stuff.

The way I perceive the Indian market is: There are many a people in the younger generation, minting a few bucks who are ready to dish out 5-6L (be it a car or bike) for pure performance.

I feel, gone are the days when there used to be MAJOR savings for a secure future and the next generation to reap rich dividends.
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Old 17th February 2011, 15:29   #9
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Don't even dream that the auto cartel in India will allow any tax/duty breaks for importing cars or other vehicles as CBUs. However the FTA may help in importing components at a cheaper rate.
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Old 17th February 2011, 17:35   #10
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Most of the FTA beneficiaries are in the healthcare, finance and tech fields.

The terms of the FTA start with REDUCTION of duties (30% to 15%, 15% to 5%) over a period of 5-10 years for a plethora of items and immediate 0% status for very few items.

I am sure CBU's will not figure in that 'Immediate 0%' list.

Spare parts and CKD's from Japan will start getting cheaper eventually (3-5 years).

Give it another 10 years and we might be able to get those Evo's at Lancer prices.

Till then, the dream lives on.
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Old 17th February 2011, 17:56   #11
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

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Originally Posted by Speeding@160mph View Post
I am sure CBU's will not figure in that 'Immediate 0%' list.

Spare parts and CKD's from Japan will start getting cheaper eventually (3-5 years).

Till then, the dream lives on.
So the Kazashi will not be any cheaper in the near future .

Here I was hoping to get the Hondas and Suzukis and Yams as CKD at a decent price!

With the surging Auto sales and crowded roads and all related problems, the reduction of duty on Japanese auto Industry will feature more later or probably never. I am generally pessimestic about good things happening to our auto industry. I hope I am wrong this time.
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Old 17th February 2011, 18:02   #12
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Well breaking the Japanese Automaker cartel is only way to reduce the prices. FTA just reduce the import duty but in no way force them to pass the same to customer , India-Thailand FTA and fortuner price is good example.
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Old 17th February 2011, 19:55   #13
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

There might be some products out of scope of the agreement right? if so, cars(as cbu) will be on that list. Although, auto components might see a reduction in prices in medium term.
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Old 18th February 2011, 09:26   #14
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Quote:
Originally Posted by rohanjf View Post
The bigger question is, will the manufacturers really pass on the benefits to buyers? ....
Quote:
Originally Posted by Torquedo View Post
All apologies here Rohan - I disagree

India is all about VOLUMES (my perception, BHPians please correct me if I'm wrong here), Japs would be more than Happy selling a 1000 R1's @ 5-6L annually rather than 10 @ 14L......
I agree with Rohan. Mercedese, BMW and Audi are assembling their cars in India but still they are priced double than what they are sold for in USA.
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Old 18th February 2011, 12:41   #15
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Default Re: India – Japan sign free trade agreement, cars bikes from Japan to be cheaper?

Assembling cars make it cheaper but the components are still imported and incur duty at almost the same rate as CBU's. The major saving is on Labor costs when comparing CBUs and CKD's. There is no significant 'Manufacturing' for Benz, Bimmer or VAG in India.
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