[joshdrive]

Originally Posted by black12rr

Well ,the so called "GERMAN BUILT" tag be still there ? .Will someone buy MADE IN INDIA lambo?

Why not? It is possible to build a good quality car here in India today. India is fast becoming manufacturing hub for auto majors. If the manufacturer "wants" to build a german build car, sure they can. The question is weather they want to build it and price it accordingly or decide to fight the competition and be cost conscious.

[dodge_v1per]

This is a no brainer. In the world of rising globalization, Every knowledgeable person knows the reason behind high Taxes for Imported Cars.

[sbraj]

Originally Posted by black12rr

Well ,the so called "GERMAN BUILT" tag be still there ? .Will someone buy MADE IN INDIA lambo?

I agree with this logic to some extent.

Originally Posted by joshdrive

Why not? It is possible to build a good quality car here in India today. India is fast becoming manufacturing hub for auto majors. If the manufacturer "wants" to build a german build car, sure they can. The question is weather they want to build it and price it accordingly or decide to fight the competition and be cost conscious.

When it comes to luxury cars (Lexus, Rolls Royce et al) I doubt whether the lower price (due to local production) or the MADE IN INDIA tag will help in boosting the sales. On the contrary, it may repel some prospective customers looking for snob value. Imagine a Indian made Hummer.

But for mass vehicles, the theory holds good, IMO.

[srikanths1]

A strange food for thought - Say if we get over this barrier and allow 0 taxation on foreign cars will...

1) our car makers really reduce that bracket and pass it on to our customers, i think not, ours is a country where still a corolla or civic sells as entry level luxury cars whereas they are the M800's of the western world

2) supposing sanity prevails over our greedy car makers and they decide to sell a corolla or a civic for 8L (meaning a city or a fiesta at 4-5L) does our nation has the capacity to absorb the increased fuel requirement (remember 70% of our market runs on small cars which gives a average of 14kmpl against these cars which will drop to 10kmpl).

Strange but bringing down the price of cars have more impacts than one can imagine. Now having given a philosophical talk, i cant wait for the day when that will happen so that a beamer is easy on my pocket

[GTO]

Originally Posted by black12rr

Well ,the so called "GERMAN BUILT" tag be still there ? .Will someone buy MADE IN INDIA lambo?

Customers seem to be just as happy with Indian assembled E Class', isn't it? Note, we are discussing the import of CBUs versus local assembly here (not complete part localisation which is impossible in the luxury segment) .

[stanjohn123]

I just read a recent article where BMW's and other luxury European car's are actually cheaper than their local manufacturer ( Hyundai ) mainly due to reduced tax's.

http://www.autoblog.com/2013/05/18/w...dais-in-korea/

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.

US , Europe should probably stop giving benefits to India unless and until India reduce's the tax rates on their car's . Don't flame me guy's , just out of frustration, but in all fairness in business / trade relations benefit's should be on both sides.

[shankar.balan]

Originally Posted by stanjohn123

I just read a recent article where BMW's and other luxury European car's are actually cheaper than their local manufacturer ( Hyundai ) mainly due to reduced tax's.

http://www.autoblog.com/2013/05/18/w...dais-in-korea/

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.

US , Europe should probably stop giving benefits to India unless and until India reduce's the tax rates on their car's . Don't flame me guy's , just out of frustration, but in all fairness in business / trade relations benefit's should be on both sides.

We are still steeped in the Nehruvian protected economy hangover though we keep saying that we are liberalized and all that.
Our manufacturers also have a very strong and powerful lobby with the government so it will take a long time for that level of competitiveness and free trading to happen. Plus the average Indian car buyer is generally preoccupied with only space, status and fuel economy. There is less incentive for our manufacturers to be competitive and innovative. They, as typical capitalists, will continue to give the buyer the least value that they can get away with and still extract the maximum price possible for the same.
Also, the evil politicos and policy makers could not care less because they anyway drive their ill gotten Euro cars for which they personally have not paid a jot of money!

[mayankjha1806]

The Korean example seems to be unfair to me to their local manufacturers. This would only kill the local industry in Korea.

On the other hand i agree India should now open up more as the local manufacturers have had a reasonable time to upgrade technically and from hereon it should be a level playing field for other manufacturers.

But, one needs to remember. In certain countries the exchange rate of their currency is forcibly pegged making their product look cheaper in comparison to the one manufacturers locally. If you allow free imports from such countries it would flood your market and kill local production. Once thats done the currency can be let free thereby making their products expensive but we dependent on them as all local manufacturers are dead.

We should not let this happen.

[Nilesh5417]

A certain amount of protectionism is necessary. A VW or BMW or Merc will always always remain a German company with global operations no matter how much employment it generates in India. It funnels development, money and lot of political mileage back to the country where its head quarters.

If the Indian government creates an advantage for local companies, its doing nothing different from what a lot of other governments world over are realizing today. The cradle of capitalism, USA itself, is now adopting restrictive practices after years of job losses and weakness in the economy. Look how hard it is looking at tax laws to make sure Apple brings back a huge chunk of money it earns as profits world over outside of USA stating that Apple is basically an American company!

I have no factual data to support my statements above but all i say is that governments need to act with interests in mind beyond a single class / section of society in all spheres.

[999]

Originally Posted by stanjohn123

I just read a recent article where BMW's and other luxury European car's are actually cheaper than their local manufacturer ( Hyundai ) mainly due to reduced tax's.

http://www.autoblog.com/2013/05/18/w...dais-in-korea/

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

US , Europe should probably stop giving benefits to India unless and until India reduce's the tax rates on their car's .

Originally Posted by shankar.balan

We are still steeped in the Nehruvian protected economy hangover though we keep saying that we are liberalized and all that.
Our manufacturers also have a very strong and powerful lobby with the government so it will take a long time for that level of competitiveness and free trading to happen. Plus the average Indian car buyer is generally preoccupied with only space, status and fuel economy. There is less incentive for our manufacturers to be competitive and innovative.

Originally Posted by Nilesh5417

A certain amount of protectionism is necessary. A VW or BMW or Merc will always always remain a German company with global operations no matter how much employment it generates in India. It funnels development, money and lot of political mileage back to the country where its head quarters.

If the Indian government creates an advantage for local companies, its doing nothing different from what a lot of other governments world over are realizing today. The cradle of capitalism, USA itself, is now adopting restrictive practices after years of job losses and weakness in the economy.

Stanjohn, a level of protectionism is required to keep the interests of the country in the fore front. All the money the MNC generates are channelled to their parent country after taxes. Also if you have not noticed before, they have no value addition centers in India other than the manufacturing plant. They use our land, people, electricity and resources to make money with the R&D they had in their parent center in Germany/US or anywhere outside India.
In the long term it is harmful to the economic future to the country if there are not regulative measures. Hypothetically, they can decide to shut shop anytime and move to their parent countries without a second thought. They employment they generate are peanuts compared to the money they make. So they are utilising us. so why don’t tax them more?

Also on another note, do you think we can compete with the auto majors (BMW, Merc, VW, Audi etc) out of the box? Why would they transfer technology to India? That was built by them over decades. We need time to catch up. That is exactly where the protectionism make sense. Consider France, a well-developed European country. Why can’t they produce something similar to a DSG/PDG on their cars (citrogen, Renault etc) after all these years? We in India are doing quite well in terms of catching up.
Having said that 100% protectionism in unwarranted and BAD. It will kill innovation and research. That is exactly why they are being on a lower level over the years, forcing the companies to develop more. A small comparison between a Maruti Swift from 2008 to 2013 should tell the story.
Europe and US does have the same level of protectionism if not more. We are not having lower/same level of taxes for the things we export to Europe, IT services. There are a few discussions going on on the free trade pact with EU. But our corrupt politics will make a deal skewed to the Europeans.
Again, given the same prices, we have a thing for foreign stuff. Period.

Shankar, Nehruvian protectionism was good for some period of time when we were independent. If not, we would have been forced into a lobby and end up on something on the lines of Pakistan. But our nation kept stretching it way too long. Reservation is another example. A novel idea, but what about it now. That is way OT. Heard of the quote " If you don’t like the colour of your flag, CHANGE it"
Also they is an incentive for our manufactures to be more competetive. Again if we did not have the "phoren" thing, a better car for less price is more attractive.
Nilesh, you just stole my words

[avira_tk]

Originally Posted by shankar.balan

We are still steeped in the Nehruvian protected economy hangover though we keep saying that we are liberalized and all that.
Our manufacturers also have a very strong and powerful lobby with the government so it will take a long time for that level of competitiveness and free trading to happen. Plus the average Indian car buyer is generally preoccupied with only space, status and fuel economy. There is less incentive for our manufacturers to be competitive and innovative. They, as typical capitalists, will continue to give the buyer the least value that they can get away with and still extract the maximum price possible for the same.
Also, the evil politicos and policy makers could not care less because they anyway drive their ill gotten Euro cars for which they personally have not paid a jot of money!

We are as far removed from Nehruvian socialism as we can hope to be, protectionism is something ingrained in every country that strives to protect its manufacturing base. I completely disagree with the point that our manufacturers strip the car to price it lower, the Germans, Japanese and Koreans all employ the same technique here and everywhere else. The base models are usually short of one side mirror also. Space, status and fuel economy are major considerations when you buy a car, Euro hatches don't sell in America because Americans aren't foolish to buy a cramped car which costs more than a full size sedan.

I would add journalists to that list of evil, most of them push any foreign brand that has given them an all expenses paid trip to an exotic location to test drive a super expensive model variant that they don't plan on selling in India.

Bias aside, no foreign manufacturer is going to come up with an equivalent to the Bolero or Thar in the near future, so Indian brands will always have a place in rural India atleast, although urban areas might completely go foreign in the next decade or so.

[blackasta]

Protectionism, in line with reservations, is only good for a certain amount of time tapering off to create a level playing field. The crucial thing that our policymaker (IMO) get wrong is the % of protection offered and when the tapering off starts/ends.

[CARDEEP]

I do not think the protectionism policy is bad, but, the means or the methods that we follow in India are not correct IMO. in order to protect local manufacturing, we have simply increased the taxes on the foreign made products, forcing Indians to buy inferior products made by Indian manufacturers (though not all Indian products are inferior, & few manufacturing facilities in our country are world class). Resulting almost every foreign company charges a premium for cars, irrespective of the product warranting that premium.

What India should follow is the equal partnership policy, i.e. Indian entrepreneurs should be allowed to solicit foreign companies, & the latter allowed to set up operations in India in a 50:50 setup (not 75% like in current case). Also, unnecessary taxes should be lowered or eliminated & beaurocartic harassment (like in case of Vodafone) should be shunned like plague & corrupt officials punished like terrorists. This will ensure that Indian industry (in all sectors) is exposed to world class manufacturing & gain on the knowledge & experience in the JV to apply these to make goods for Indian public (licences allowed only if the knowhow is put to use for Indian manufacturing).

This may seem radical & extreme to some, but, will ensure that:
1. Indian entrepreneurship & manufacturing is promoted.
2. Manufacturing Industries employ millions, & this will ensure more employment is generated, especially for those who are at the lower level of society & have lesser exposure to better life otherwise (these people have tendency to take up crimes at certain stage).
3. Recovery of Taxes will be on higher side, since local manufacturing will ensure cost is cheaper, thereby more demand & more production.
4. Deficit of Foreign Trade will improve & tilt in our favour (this is elaborate topic & can be discussed separately).

I hope whoever wins election next time has the vision & courage to do so, though I do not see anyone have the balls to bring drastic change in India, & feel they could be more happy having palms greased, rather than bringing on the change systematically.

[satyaanveshi]

The thread title and some of the subsequent posts are rather misleading. A distinction needs to be made between local manufacturing and local manufacturers.

Indian government policy is geared to encourage local manufacturing. Import duties are highest on CBUs, followed by SKDs and the least on CKDs, which is as it should be. There is nothing specifically to favor local local manufacturers, i.e. Indian companies. A Tata or a Mahindra too will have to face high import duties if they bring in products from their foreign plants. But a VW or a BMW can save on import duties if they put up plants in India. The idea is to encourage value addition in India.

The policy favoring domestic manufacturing has played an important role in developing the Indian auto sector. Without it, many global majors such as Toyota, Honda, VW, BMW, Merc, etc may never have set up plants in India, or at least reduced the size of these plants.

The comparison with Korea is irrelevant. Korea has a booming manufacturing sector and substantial trade surplus with most countries. Low import duties permitting some US/EU imports are part of the larger strategy of ensuring that the US/EU remain receptive to exports from Korea. Overall, Korea gains by retaining a substantial trade surplus.

The comparison with Nehruvian protectionism etc is totally misinformed.

[arpanjha]

I believe, the policy taken up by the governments are definitely protective & positive too. I totally agree that our homegrown companies need to make better products, it is high time, but then these policies have a wider impact. It supports the country's manufacturing base, Tatas and Mahindras are big, let us not consider their profits, but the thousands of small companies or vendors of these huge manufacturers get a big chance to work their way and contribute to the economy. It generates huge employment. If we simply allow the big european companies to come down with their impeccable products at cut throat prices, what benefit will it be of? It shall be of benefit to just a few rich or upper middle class group of people who can afford to buy a luxury car, it doesnt really matter much to them if an S class costs 1crore or if it costs 70Lakhs. But if the indian manufacturing sector benefits form these protection policies, lots of local small scale industries get boost as well. So let us not be selfish and think of the bigger picture.