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Old 23rd February 2011, 10:01   #46
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Default Re: Prices of Imports set to come down drastically !!

If this proposal is implemented which seems like it WILL be. Where is the problem ? Let the other manufacturers also start producing quality cars. This is only going to benefit us consumers.

Over the last decade, we have seen the cars on offer have only been getting better & the choice wider. Cars over a certain price point (say 10L) have found many takers which was not the case earlier.

So let us wait & see if the good times roll & offerings from all car makers become better due to increased competition.


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Old 23rd February 2011, 10:44   #47
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by Ricky_63 View Post
If this proposal is implemented which seems like it WILL be. Where is the problem ? Let the other manufacturers also start producing quality cars. This is only going to benefit us consumers.

Over the last decade, we have seen the cars on offer have only been getting better & the choice wider. Cars over a certain price point (say 10L) have found many takers which was not the case earlier.

So let us wait & see if the good times roll & offerings from all car makers become better due to increased competition.


Cheers
The problem is, we will become a import oriented nation. The idea is to be self-sufficient (not realistic) or export oriented (wishful). We need to strike a fine balance between these three. Below are the issues, as i see it,

1. Forex:
Currently we are losing a lot of forex on oil as we cannot produce to fulfill the local demand. This inturn will affect the value of our currency. We will end up paying higher coz what we can buy today with INR 1000 will need INR 1500 ~ INR 2000 if the currency gets devalued! (just an ex, not based on any calculation)

2. Loss in creation of jobs
If the same co's had opened factories in India, it would have given jobs of lakhs of people here. Note, i am talking about both white & blue collar here. Lesser jobs --> more unemployment --> higher income divide --> higher crime. More people in BPL, higher will be need for free medical care, budgets for the same have to go up. You and I will have to pay for the same via income/ other tax!

3. Death of local player
Remember Gold spot, Torino all these co's couldn't survive against the deep pockets of Pepsi and Coke. The same will happen to say companies like Force, God forbid, Tata. It also means loss of jobs to the once currently employed by these companies (directly/ indirectly). The other day i was watching Top Gear, they said at one point there were 130 local car manufacturers in Britain, until the Germans (VW) arrived.

4. Nurture local companies
If we let a free hand, then none of the Indian companies will survive. BMW and likes have been around for 100's of years and have reached this level. Its wrong to expect Tata/ Mahindra to fight with them, these guys haven't had the time to get ready for battle. Let them grow via the natural process of failure and improvement. Compare apples to apples here, compare Indian car makers to Chinese car makers (coz, I think the respective local industries came about almost at the same time)

Lastly, why shouldn't we tax these guys more? When the US can tax Indian IT companies to raise money for their Internal security budget. Why shouldn't we tax imports to raise money for our budget.

General observation, most of the replies by the members here are from a point of view of a car buyer. Like, this we would expect that there shouldn't be any tax at all on the imports! We all would love to drive around in Mercs, BMW etc. But if you look at the marco view we all will have to pay dearly if this were to come true.
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Old 23rd February 2011, 11:11   #48
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Default Re: Prices of Imports set to come down drastically !!

Spot on Mac, presently India is a highly competitive producer and exporter of small cars. MNCs are forced to set up local operations to access the Indian market and then go ahead to use this to feed other potential markets as well.

The biggest threat if we open up our car market is from becoming a dumping ground for appaling chinese imports. Sooner or later rapid expansion of production facilities in china followed by a saturated home market will mean that the excess production will have to be dumped somewhere, even at a loss to sustain the industry. We saw this in the late 90s with cheap TVs that were shipped here.

Our cars are not expensive due to big margins but due to the ridiculous taxes/duties the govt. imposes on both the manufacturers and the finished products.

Other than Peugeot/Citroen every other carmaker worth their salt are present in our market. There is plenty of both choice and competition. Opening up the market just because some customers can save a few thousand does not seem to be a worthwhile enough reason.
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Old 23rd February 2011, 12:14   #49
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Default Re: Prices of Imports set to come down drastically !!

+1 to what Mac said.

This is a very weird move by India. Given our trade deficit nature, we should focus on bringing manufacturing facilities home through subsidies and infra creation.

This just gives companies a greater incentive to not invest in India. As an auto enthusiast, a thumbs up. But as a citizen of India, a big thumbs down to this.
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Old 23rd February 2011, 12:21   #50
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Default Re: Prices of Imports set to come down drastically !!

It's quite simple. If India wants to continue exporting high-value commodities & services then it has to compromise on import tariffs. Or else do not cry loud if EU imposes 100% import tariff on Indian exports or US hikes HIB visa fees by 150%.

All I see are cries from automobile ancilliary manufacturers who are crying hoarse on any such move. Used as they are to pawning off their substandard wares on unsuspecting Indian car owners.

Any case India's USP is the small-car and no amount of cut's in import duty is going to make any difference. Bulk of India's production capacity also is in cars below 1.2 ltr capacity. Now how many EU car companies can claim to have manufacturing prowess in this category.
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Old 23rd February 2011, 12:36   #51
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Default Re: Prices of Imports set to come down drastically !!

To further a point Lurker made, companies like Hyundai have made India a worldwide manufacturing base for small cars. India actually exports these to the west.
So its just loud noise from auto companies used to a protectionist environment, where they can literally take the customer for a ride.
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Old 23rd February 2011, 12:55   #52
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by lurker View Post
It's quite simple. If India wants to continue exporting high-value commodities & services then it has to compromise on import tariffs. Or else do not cry loud if EU imposes 100% import tariff on Indian exports or US hikes HIB visa fees by 150%.
+1. We need everything for free. I'm sure that if there is a move from US or EU to impose taxes on Indian exports,visas, etc etc the same people who oppose this FTA will be the first ones to cry out loud, calling it foul.

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Originally Posted by tsk1979 View Post
To further a point Lurker made, companies like Hyundai have made India a worldwide manufacturing base for small cars. India actually exports these to the west.
So its just loud noise from auto companies used to a protectionist environment, where they can literally take the customer for a ride.
I think all the Indian manufacturers are afraid of losing the protection that they enjoy because of the rules. If there is a free trade agreement, then they will be forced to bring out quality products and cannot rip the domestic market any more.
From one side, we are calling ourselves almost developed country and from the other side, we are asking for protection like a 3rd world country. Cannot get everything together, right?
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Old 23rd February 2011, 12:59   #53
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by mac187 View Post
The problem is, we will become a import oriented nation. The idea is to be self-sufficient (not realistic) or export oriented (wishful). We need to strike a fine balance between these three. Below are the issues, as i see it,

1. Forex:
Currently we are losing a lot of forex on oil as we cannot produce to fulfill the local demand. This inturn will affect the value of our currency. We will end up paying higher coz what we can buy today with INR 1000 will need INR 1500 ~ INR 2000 if the currency gets devalued! (just an ex, not based on any calculation)

2. Loss in creation of jobs
If the same co's had opened factories in India, it would have given jobs of lakhs of people here. Note, i am talking about both white & blue collar here. Lesser jobs --> more unemployment --> higher income divide --> higher crime. More people in BPL, higher will be need for free medical care, budgets for the same have to go up. You and I will have to pay for the same via income/ other tax!

3. Death of local player
Remember Gold spot, Torino all these co's couldn't survive against the deep pockets of Pepsi and Coke. The same will happen to say companies like Force, God forbid, Tata. It also means loss of jobs to the once currently employed by these companies (directly/ indirectly). The other day i was watching Top Gear, they said at one point there were 130 local car manufacturers in Britain, until the Germans (VW) arrived.

4. Nurture local companies
If we let a free hand, then none of the Indian companies will survive. BMW and likes have been around for 100's of years and have reached this level. Its wrong to expect Tata/ Mahindra to fight with them, these guys haven't had the time to get ready for battle. Let them grow via the natural process of failure and improvement. Compare apples to apples here, compare Indian car makers to Chinese car makers (coz, I think the respective local industries came about almost at the same time)

Lastly, why shouldn't we tax these guys more? When the US can tax Indian IT companies to raise money for their Internal security budget. Why shouldn't we tax imports to raise money for our budget.

General observation, most of the replies by the members here are from a point of view of a car buyer. Like, this we would expect that there shouldn't be any tax at all on the imports! We all would love to drive around in Mercs, BMW etc. But if you look at the marco view we all will have to pay dearly if this were to come true.

India's economic model, is in lot of ways similar to those of developed nations. It has never been one of an export oriented economy, Unlike China. Our trade balance has always been in deficit. So you cant say that "we will become a import oriented nation" . We already are and it is not a bad thing.
The thing about being an export based economy, which you consider (wishful), is that eventually you will lose the benefit of low cost manufacturing and head towards becoming an import based economy. Another thing is that if your economy is export based, you are highly exposed to one single currency(in most cases USD). It means that if that one currency depreciates, your holdings would suffer severe loss in value.

.I know people always relate to currency depreciation as bad thing and appreciation as good thing but thats not always the case. Depreciation is not always a bad thing. Specially if you want to decrease your trade deficit(which India wants to). The more, the value of Indian currency in forex market, the less attractive its goods are in the foreign market.In simple terms, foreigners will import more if they have to pay less for your goods. Thats the most important reasons why China has a pegged exchange rate system.

"2. Loss in creation of jobs"
You are all over the place in this point. I do not see any support for your statement. The connections you make are baseless and unrealistic.
BMW never produced 7series in india. So they did not hire anyone from india to produce those cars. Your whole idea is based in based on something that could happen or could not happen. Moreover bmw never planned to produce their flagship car in India. As these companies grow, they will increase their dealership network and service stations in india(job creation).

Death of local players is a very sad thing but it is something that could not be avoided if you want to progress. You cant stop building big bazaars for saving the small grocery store owners(from local city). You cant stop mcdonalds from entering india to save indian restaurant businesses. (thats the characteristic of becoming a developed nation).

4. Nurture local companies
If we nurture local companies, we will never become a developed economy. The first step towards development is the openness of the market. Just take time to see and compare the data of indian economy before 1991 and after the liberalization in 1991. If india had never allowed foreign companies to compete in indian market, India would still be what it was before 1991. India progressed at a very slow rate until 1991 and since then its growth rate has averaged significantly higher at around 5%.

I agree with your final point. We should always have tax.. but it should not be some ridiculous amount that would discourage imports.

I am considering both the micro and the macro level.

There is always going to be a negative side to any decision, but that should not hault our progress. We cannot keep operating inefficiently forever.
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Old 23rd February 2011, 13:00   #54
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Default Re: Prices of Imports set to come down drastically !!

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Originally Posted by mac187 View Post
The problem is, we will become a import oriented nation. The idea is to be self-sufficient (not realistic) or export oriented (wishful). We need to strike a fine balance between these three. Below are the issues, as i see it,

1. Forex:
Currently we are losing a lot of forex on oil as we cannot produce to fulfill the local demand. devalued! (just an ex, not based on any calculation).
2. Loss in creation of jobs
If the same co's had opened factories in India, it would have given jobs of lakhs of people here.You and I will have to pay for the same via income/ other tax!-->
3. Death of local player
Remember Gold spot, Torino all these co's couldn't survive against e point there were 130 local car manufacturers in Britain, until the Germans (VW) arrived.
4. Nurture local companies
If we let a free hand, then none of the Indian companies will Chinese car makers (coz, I think the respective local industries came about almost at the same time)

Lastly, why shouldn't we tax these guys more? When the US can tax Indian IT companies to raise money for their Internal security budget. Why shouldn't we tax imports to raise money for our budget.

General observation, most of the replies by the members here are view we all will have to pay dearly if this were to come true.
[] BOP implications are there for any transaction involving import not only POL. If your contention is that due to BOP implications POL imports need to be curbed then simply create a state of the art public transportation infrastructure. Bulk of private transportation POL consumption is due to lack of infrastructure worth the name. I will cite an instance . Last year the Metro started covering the part of Delhi where I reside. One day I and my son decided we needed to eat ice cream from Nirula's in C.P. and would use the Metro for the commute. Suffice it to say I am not going to do it again EVER unless and until there is an improvement of several orders of magnitude.

[]How many jobs will be lost on account of luxury car imports? How many companies will find it worthwhile to move product from overseas locations if they have the volume game going for them? To my mind any competent manager chasing volumes will try to be the lowest cost vendor to the customer. If the other conditions exist that enable optimisation of costs, then other things being equal manufacturing will move to locations within India.

[]If I were to buy your arguement then TML should not be allowed to operate in the U.K. They should be compelled to sell their U.K. operations. By the same logic Mahindars should be compelled to exit Ssangyong. Force is a remnant of the license permit raj when manufacturing capacities were the determinant of who existed in which business as opposed to product or pricing. The company if it desires to exist should earn it's place in the scheme of things by delivering a product the customers want at a price the customers want. Else it should fold up.

[]You are just not making sense! Tatas have bought over truck operations of Deawoo & JLR, Mahindras have taken over Ssangyong. So where is the comparison not warranted.
[]If the government finds the taxation of IT companies violative of WTO obligations on member nations why has the government not taken appropriate actions? Similarly if imposing taxes is possible and not violative of WTO obligations rest assured the babus will not desist from imposing such taxes.
[]We are paying now. The exhorbitant prices that we are paying are extortionate to say the very least.

Last edited by RS_DEL : 23rd February 2011 at 13:38.
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Old 23rd February 2011, 13:20   #55
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Default Re: Prices of Imports set to come down drastically !!

This is not a issue of just local jobs, if we want to exploit open markets in other regions we have to open ours up which is what this is about, jobs are not simply created by local demand, most successful nations have grown on global demand because initially there is always very little local demand.

In the case of India local demand has always been limited so the market is too small to sustain serious R&D, and protection far from spurring innovation has resulted in unsafe an outdated technology being offloaded in India.

The alternative is world class innovation and products, and global markets which will lead to much more employment, growth and better standards of living. South Korea is a recent example of this.

Our IT industry is another example of this, this has helped create a better paid workforce and is spurring growth and local demand. If other countries tried to tax and protect local jobs we would not have this success which has changed India.

Replicating this across industries is the only way to get more Indians access to better standards of living and overall growth for the country, protecting domestic industries only makes a few well connected fat cats richer, especially when they are not innovation but importing outdated tech, maybe for 20 years or so for the initial spurt but now its counterproductive.

Last edited by raul : 23rd February 2011 at 13:23.
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Old 23rd February 2011, 13:56   #56
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Default Re: Prices of Imports set to come down drastically !!

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This is not a issue of just local jobs, if we want to exploit open markets in other regions we have to open ours up which is what this is about, jobs are not simply created by local demand, most successful nations have grown on global demand because initially there is always very little local demand.

In the case of India local demand has always been limited so the market is too small to sustain serious R&D, and protection far from spurring innovation has resulted in unsafe an outdated technology being offloaded in India.

The alternative is world class innovation and products, and global markets which will lead to much more employment, growth and better standards of living. South Korea is a recent example of this.

Our IT industry is another example of this, this has helped create a better paid workforce and is spurring growth and local demand. If other countries tried to tax and protect local jobs we would not have this success which has changed India.

Replicating this across industries is the only way to get more Indians access to better standards of living and overall growth for the country, protecting domestic industries only makes a few well connected fat cats richer, especially when they are not innovation but importing outdated tech, maybe for 20 years or so for the initial spurt but now its counterproductive.
+1 I couldnt agree any more. Openness in the Market is the KEY. Country where there is lack resources to innovate, have to rely on the ideas and technology from foreign nations(it is not a bad thing). China has been very successful in this. S.Korea on the other hand, has invested in RnD and created their own path. The way korea has progressed in recent years is commendable and open nature of their economy has helped it become a developed nation today. Both the ways are effective to a certain stage.However India should be more in the line with China due to limited resources.
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Old 23rd February 2011, 14:25   #57
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Default Re: Prices of Imports set to come down drastically !!

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"2. Loss in creation of jobs"
You are all over the place in this point. I do not see any support for your statement. The connections you make are baseless and unrealistic.
BMW never produced 7series in india. So they did not hire anyone from india to produce those cars. Your whole idea is based in based on something that could happen or could not happen. Moreover bmw never planned to produce their flagship car in India. As these companies grow, they will increase their dealership network and service stations in india(job creation).
I think i wasn't clear in my point here. I meant the notional loss of not forcing compaines to open factories in India. To gain price advantage the likes of Hyundia, Ford, VW have opened plants here and that has created jobs. If the luxury carmakers want the same advantage, they too can open shop here. Its not that labour is expensive here!

In a few years we will have the largest population in the work-able bracket, and there are no jobs!!!! Govt is not creating any, if you partically wave a red flag to investments, how are we supposed to provide jobs to most people.... This is what i meant....
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Old 23rd February 2011, 14:26   #58
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Default Re: Prices of Imports set to come down drastically !!

To all those who are giving a thumbs down to this proposed system please enlighten me on one thing.

Say the price of a S class or a 7 series comes down to 50 lakhs.and the price of the corresponding E class or 5 comes to 25 lakhs and the C class or 3 series comes to 18 lakhs.
So you guys are saying that this will hurt the indian industry.But before that tell me how is it possible that these car companies abroad can manufacture better cars for a cheaper pricetag than the indian companies.

Say for instance that with the 3 series costing 18 lakhs companies like honda will lose out on the accord and the civic as well.right?So why is it that the Honda civic which starts at a base price of a little above $15000 is sold for 12.5 lakhs in india?

So my Final question:Why can't indian Manufacturers Price the cars at prices similar to US or UK?

And i am talking about the ex-showroom prices.

If there is an arguement that there are taxes on the car even before the ex-showroom price then please let me know how much is it? is it equivalent to 3-4 lakhs for a civic?

Also why is it that an Indian Manufactured 3 series and an Imported 3 series cost the same.So it basically goes down to these companies booking loads of profits.

And this goes down to every manufacturer in india.Be it maruti or be in honda or BMW.

For this reason i think this will be a good move and this would then give us more competition and for the end user this would be a boon.

Regarding the loss of jobs etc.No this will not happen.We have the cheapest labour rates in the world.Components are manufactured here in the same quality way way cheaper than the rest of the world.

The only thing this move would do is make us indians pull up our socks and start working even more hard.We have no dearth of talent in our country.We are the best.Heck this is the reason we even build parts like crankshafts for the finest italian companies.And that too in Jalandhar!

We just need the owners of these companies pulling thier socks up.Employment would get better as we start making better components and more and more companies around the world start noticing this.

I always advocate that a short-cut is no way of success and advancement and developing.Fight it out with the best.We have already proved we are the best in every field except politics.

Give us indians more shortcuts with these duty structures would only give more money to the owners of these companies and make us loose more of our talent.Because there would be no competition.

Why can't we build a BMW 7 series or a S class for 50 lakhs if they can do it in germany?

This is now the stage that we need to let go of our "Chalta hai" sttutude and become hard working and committed to our work and company.This is the only way we can succeed as individuals and as a nation!
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Old 23rd February 2011, 15:19   #59
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Default Re: Prices of Imports set to come down drastically !!

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Because they will not be allowed to import them at the same duty structure - that is strictly my understanding. AND one cannot legally import a car less than $40k billing price. So they cannot.
...

Though about the Japs bit..well let's see ! Maruti / Suzuki swallowed the market since inception. The Maruti 800 was a status symbol - no less in the early 80's - SO the Japs have had a good run for twenty years and are still ruling the roost. I really do think the other "niche" players ought to get real on pricing & see how it goes.

Cheers
I cannot see why the big yell about protecting local industry! We are already paying the equivalent of USD 40,000 or more for a VW Jetta, for crying out loud!! For 37K in USD, you get the newest Passat in the US at top spec. Who are the enlightened souls that want to willingly part with such huge amounts of money for what are frankly available for half the price in their home countries? And we claim we are a developing nation?! How can we afford to pay double then??

And what local industry are we talking about? Maruti is as local as they come, and we are only seeing Kizashis and the like as the pinnacle of achievement, and that too imported.

Anyone look at the "new" Thar recently? Is it any different from something of 3 decades ago??

Bajaj and Telco fleeced us all for decades and is responsible directly for each smoke belching truck, auto and scooter still croaking on the roads today.

I would like to see how many people on this forum crying for protection actually pay up the "hafta" amount if there is an alternative, lower, price!
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Old 23rd February 2011, 15:23   #60
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Default Re: Prices of Imports set to come down drastically !!

what local industry are we trying to save. maruti is more suzuki based. tata and mahindra to save i dont want to lose out on the better cars available at normal prices. tata and mahindra cars are not worth over 10 laks anyways. bring them on i want a bmw 3 for under 20 laks
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