[karan561]

SIAM says inclusion of the auto sector in FTA will be harmful.



^ But by leveraging CKD route car makers can create more jobs.

Last week, the Society of Indian Automobile Manufacturers (SIAM) circulated a white paper on the likely impact of the inclusion of automobiles in the ongoing FTA talks between the EU and India. Briefly, it said that if automobiles are allowed in at lower duty rates (the current rate is 75 percent pending the passing of the Budget which suggests a 100 percent), it would lead to investments drying up and therefore, fewer jobs created.

Source & Full Article : http://autocarpro.in/contents/others...px?OtherID=192

[coolclouds]

Luxury cars set to get drastically cheaper

Sidhartha & Pankaj Doval TNN

New Delhi: Luxury cars are set to get dramatically cheaper.Not just the ones from Europe,but also those from Japan and South Korea.Over the next few years,the Centre is likely to cut customs duty on vehicles shipped from European Union countries and Japan and South Korea,nations with whom India has free trade agreements.

European car makers will get a headstart as the government,beginning 2017,has offered to lower customs duty to 30% on cars under the proposed trade & investment agreement with the European Union.Japanese and Korean car makers are also expected to get the same benefit with a lag of a year or two,although the final decision on the issue is still awaited,sources said.
Currently,cars with a landed cost of over $40,000 (around Rs 22 lakh) face 100% customs levy,and those below that pay 60% import duty.

In the case of EU,there is also a move to allow the import of 2.5 lakh cars at 10% duty from 2017-21.(So,the Mini Coopers price could be halved.) Anything above the quota will come at 30% levy.Customs duty reduction to 30% will mean the total duty incidence,including local levies,will fall to around 80% from 174% currently,which includes countervailing duty,special additional duty,cesses and surcharges.



Source: http://lite.epaper.timesofindia.com/...=&publabel=TOI

[Warwithwheels]

Not good for the Nation at all.

The single major driving force, thus far for most luxury car makers (BMW, MERC, AUDI etc.,) to setup shop in India was the astronomically high rates of import duty which was making their products non attractive in the Indian market.

If the import duty is slashed drastically, no car maker outside India will have the inclination to setup shop in India.

This will also drastically reduce the FDI in Auto industry, employment opportunities and a whole gamut of other development initiatives.

The livelihood of the desi car makers will also take a huge beating.

If at all, somebody finds this news pleasing it would only be the die hard petrol heads amongst us.

[man_and_machine]

Originally Posted by Warwithwheels

Not good for the Nation at all.

Disagree. Why should only the Auto industry feel this 100% burnt? The alternatives in luxury segments from local vendors are limited. We need the tech from where ever it is to remain competitive for the customer. If you put a 100 in say electronics then we might just all have to buy Carbon and Micromax! The FTA allows concession for the broader economy as well so India will benefit from the services markets in those nations, but that is beyond the point. There is no preventing Indian companies from Innovating in that segment. How many truly fully local companies do we have? All Indian players have access to tech from outside, TATA, Mahinda, MUL Et.all. So it will b fair to provide the market in India with a fair choice of products. Imagine the AfterSS economy that ill boom around these new products, that is boon to the market. In fact this will grow the market. This is not happening tomorrow, 2017 will give enough time for local manufacturers to fix there go to market strategy.

FDI will have little impact, this move will force the companies in the long term to invest into support and may be later produce the extra cars, if I am say so, they sell. FDI has a long term vision from the investor. With so much uncertainties in policies who would put money into a slowly growing auto market? This agreement will allow a window of testing for the companies to strategise better. I look at this as a trainer for further investments to come? See it otherwise ?

[sridhar-v]

Originally Posted by coolclouds

In the case of EU,there is also a move to allow the import of 2.5 lakh cars at 10% duty from 2017-21.(So,the Mini Coopers price could be halved.) Anything above the quota will come at 30% levy.Customs duty reduction to 30% will mean the total duty incidence,including local levies,will fall to around 80% from 174% currently,which includes countervailing duty,special additional duty,cesses and surcharges.



Source: http://lite.epaper.timesofindia.com/...=&publabel=TOI

Based on my experience with the way govt. works, they will reduce the basic customs duty for the quota cars but tweak the CVD & cess. So do not get ur hopes up of getting bargain bottom prices for the BMWs & Mercs etc

[Maky]

Given the way things are going. I think have a Y-o-Y reduction on Import duties over the next say, 6 years, is the way to go. This should benefit both the Indian consumer and allow domestic players adequate time to manufacture 'competitive' cars. They've been shielded for far too long and dare I say have been intentionally lazy not to bother. Simply have a look at the advancements made by local manufacturers and the cost at which they offer their products and what one may be able to procure internationally at the same price.
Personally however & this is from an economic point of view, I would still have preferred an even further hike in import duties and a massive reduction in duties for CKDs all the while re-defining what a CKD is. A CKD should have a substantial amount of localisation hence not simply create 'screwdriver' jobs as is so eloquently quoted in the above article.

[Motored Mindset]

I think this is a good move. For all you know, with a 30% customs duty on cars (and 10% for EU cars under the quota), the government stands to earn far more through taxation than they currently do with the import duty they currently charge YoY because of the sheer volume of cars they will now be taxing.

The global scale and reach of the biggest car makers means that its is not outright discrimination for India to execute and FTA with the EU and not Japanese and Korean Governments. The biggies like Honda, Toyota and Hyundai are very much present in the European market with plants there and are capable of importing their luxury vehicles. We have to remember that Honda/Toyota/Hyundai are predominantly volume players compared to the Germans (Mercedes BMW etc) and the Swedes (Volvo), therefore it would be unviable for them to import their volume models where the price means everything.

Every ruppee I as a consumer saves, could go to another good or service that guarantees someone else a job, so its not fair to cite loss of jobs as a reason for them to import luxury vehicles. Its the patriotic symbolism we have that makes us think we are losing out as a nation if we rely on the import of cars, when actually the gains from trade only bring in greater prosperity, especially free trade.

In other news, the government today allowed hotels and tour operators to import cars and SUVs under the Served from India Scheme (SFIS) to encourage export of services, especially in the tourism sector. The full article can be accessed at http://www.indianexpress.com/news/go...cheme/1104413/

[Warwithwheels]

With more number of gas guzzlers on Road, the fuel demand will also go up.

[chennai-indian]

Meanwhile in China:
http://economictimes.indiatimes.com/...w/19662361.cms

The Chinese Govt rules are much more restrictive compared to India - there car makes are forced to form JV's with local car companies, share technology and even introduce local branded cars (see the link above). Still, foreign car makers cry unfair trade practices and policies here when they bend over backwards to accommodate Chinese Govt. Yes, I know China is the biggest car market in the world but still.

[tsk1979]

More news

http://timesofindia.indiatimes.com/b...w/26877031.cms

Indian can export cars to EU duty free. EU has been asking similar concessions. With India not relenting, EU may remote India from favored nations list

So this presents an interesting issue to Indian car makers.
They oppose FTA through SIAM lobbying.
But now, they have to figure out whether they lose more or gain more.

If Indian market was growing fast, then they could have said "good bye europe" but with the slump in local sales, exports buoyed them.

Tricky situation. 2014 could be interesting. I am just wondering, how much would a 1 series cost if there were no customs duty? Food for though, eh?

Originally Posted by chennai-indian

Meanwhile in China:
http://economictimes.indiatimes.com/...w/19662361.cms

The Chinese Govt rules are much more restrictive compared to India - there car makes are forced to form JV's with local car companies, share technology and even introduce local branded cars (see the link above). Still, foreign car makers cry unfair trade practices and policies here when they bend over backwards to accommodate Chinese Govt. Yes, I know China is the biggest car market in the world but still.

The issue here is different. India gets duty concessions(0% duty) for cars exported to EU. They just want India to return the favor.
Also, India need not have any FTA with Europe. Nobody forced India to enter into the FTA. But in international trade, its always both ways.
The only reason EU has not removed India from list of duty free nations till now is lobbying by mfrs who manufacture in India and export to Europe, but their number is small. Till date, no duty into India was of interest only to a few mfrs. With more and more joining the party, the clamor for tit for tat will only go stronger.

[harpreetkanwar]

Does anyone have any more news on this ? Will Mr. Modi make the necessary changes ?

[sgiitk]

This will all be part of the FTA arrangements. There will be a lot of ethanol also coming in with reduced tariffs!

[harpreetkanwar]

Originally Posted by sgiitk

This will all be part of the FTA arrangements. There will be a lot of ethanol also coming in with reduced tariffs!

Okay Sir, next question. When ?

[sgiitk]

Originally Posted by harpreetkanwar

Okay Sir, next question. When ?

Only God and NaMo know. Incidentally which part of my post are you waiting for!!

[undead]

Might be slightly OT

My wish to the Government is that provide some relief in Import duty for CBU cars for manufacturers who satisfy certain conditions.

For eg :
Custom duty exemption is available upto 50% for manufacturers for their CBU models IF

1. They assemble and sell atleast 3 vehicles in their factory location in INDIA , AND
2. Localisation for the above 3 vehicles is atleast 90%

This will provide support for those companies invested in India and also have created business opportunities for companies involved in making spare parts.

Some companies like Hyundai ,Honda, VW ,Renault will be benefited by this and it will encourage them to bring in their higher models at a competitive price via CBU route like Sonata , Accord , Santafe , Phaeton , Koleos etc.

Just my thought . Hope i am not being harsh / over optimistic.