[Warhound]

Anddddddd... more whispers !!


NEW DELHI: Finally, top-end wines and spirits and automobiles may cost less with India softening its position on reducing import duty on these products shipped from the European Union.

The concessions are expected to be offered under the proposed free trade agreement that is being negotiated with EU. Official sources indicated a softening of stance after holding firm for several months. The concessions are likely to come in return for benefits in services sector as well as for products that Indian companies export to the 27-country trading bloc.

All these months, the government had not budged on the issue in the wake of protests from the domestic industry, which feared a flood of imports if duties were cut on these two product segments. But officials said that in case of automobiles, India was slowly emerging as a major production centre for small cars but it was not the case with top-end cars, which companies still found cheaper to import given the low volumes. "Lower duty on high-end vehicles will not necessarily result in a rush of imports because the market is limited," said a commerce and industry ministry official.

Customs duty on completely built cars is over 100% and the government is toying with the idea of using tariff rate quotas, which will allow only a limited number of vehicles to be imported at concessional rates. Officials also said given the problems in Europe and the loss of competitiveness, the threat from cheaper imports was lower now. Similarly, in case of wines and spirits, the move is expected to be targeted more at wine. "We do not have the grapes or the skills to produce chardonnay wines and the import of top-end of these products is not going to affect either our farmers or the wine industry," an official said.

Unlike automobiles, where the industry is split, based on the parentage considering car makers are from Japan, South Korea, Europe or the US, in case of wines and spirits, it is the domestic industry that is opposing a tariff cut. It fears a rush of whisky and vodka if import duty is reduced.

Over the years, the local players have successfully blocked significant reduction in customs duty. Officials said even if the move to cut tariffs in the EU FTA went off, the government may not lower the import duty on automobiles under trade deals with Japan and South Korea, which have already made similar demands. "Whenever you sign a new agreement, you go a step further than what you offered in the previous one," an official said.


EU-India import duty: Top-end European cars, wine may get cheaper - The Economic Times

[S_U_N]

Some more news about this on ET today.
Imported wine, Scotch, cars set to cost less - The Economic Times

Looks like the day is not far away now.

[pgsagar]

Wow! Somebody tell me CBR1000 and Hayabusa will cost less in 2012.

[bharatbs]

Originally Posted by pgsagar

Wow! Somebody tell me CBR1000 and Hayabusa will cost less in 2012.

Not unless they are manufactured in Europe, the trade agreement in question above is with Euro Zone. Ducati should definitely cost less but no one knows when this will come into effect, if at all.

[Abhi_Automobile]

Any idea over the CKDs? Or will companies simply stop doing a CKD operation since they gap between CBU and CKD will come down drastically...

Any time frames for this? My next car will almost certainly be a CKD one. So, it directly affects me in the near future.

[bharatbs]

SIAM throws a spanner in EU FTA wheels

India-EU FTA: SIAM hits out at move to cut import duty on cars - Economic Times

Stating that India will gain nothing from the proposed FTA with the European Union, automobile industry body SIAM today reiterated that the sector should be kept out of the purview of the pact.

"... We understand that the government of India is now considering a reduction of tariff for CBUs (Completely Built Units) under the India-EU FTA, which will be a reversal of the policy of high tariffs to force investment, local manufacturing, local value addition and local employment," the industry body said in a separate statement.

Stating that has been no open debate and the entire regime is forced on the people of India without any sectoral cost-benefit analysis, SIAM said it "is not convinced that India is going to gain anything substantial out of this FTA".

"In agriculture, we do not have capacity to export even if we gain market access, since we are not able to feed our own people and already facing a runaway food inflation situation in the country, which is de-stabilising the entire economy," it added.

Also, SIAM does not believe that the EU will allow large-scale import of Indian agricultural produce and it can be easily stopped through non-trade barriers.

The industry body also said India's free trade agreements with other countries like Japan have not resulted in any benefit for the country.

I have to agree with SIAM on this, manufacturing is better than imports!

[Warhound]

India is learnt to have broadly agreed to lower import duties on cars from the European Union (EU) region from the existing 60%, bringing it at par with the duties levied on cars that are assembled here under the completely knocked down route.
The EU and India have made "substantial progress" on the former's demand to cut import duties on cars in the proposed bilateral trade and investment agreement (BITA) during the 12th EU-India Summit in New Delhi on Friday, sources said.
The EU wants import duties on cars to be halved as part of the proposed BTIA aimed at giving a fillip to a more expanded trade between the two sides.
Once the BITA comes into force, companies auch as BMW, Mercedes Benz, Audi, Volkswagen, Skoda, Jaguar Land Rover, Fiat, Maserati, Lamborghini, Bentley, Rolls Royce and Mini would directly benefit from the lower duties. The prices of their cars are likely to come down by as much as 20%.
However, the move is unlikely to go down well with the domestic industry as well as countries such as Japan, Korea and the US.
Despite being more prominent players in Indian market these countries do not enjoy any duty relief, as cars feature in the negative list in the bilateral trade pacts with them.
So, while a made-in-Sweden Volvo XC60 will see its price fall from Rs 41 lakh to Rs 33 lakh, its Japanese competitor Mitsubishi Montero will still cost Rs 39 lakh.

Indo-EU FTA to lower prices of imported cars - Hindustan Times

[shankar.balan]

Just go back into History and note that the really powerful countries in this world were founded to a certain extent on manufacturing prowess. India should definitely continue to develop the manufacturing sector. The world cannot live by services alone!
However, our manufacturers would do well to somehow become masters of quality rather than compromise!

[ayushSRV]

Originally Posted by Abhi_Automobile

Any idea over the CKDs? Or will companies simply stop doing a CKD operation since they gap between CBU and CKD will come down drastically...

Any time frames for this? My next car will almost certainly be a CKD one. So, it directly affects me in the near future.

I had the same question in mind as my next car will be a CKD, too.

So would FTA help lower the prices in this area?
Take Laura Petrol, for eg, would it be wise to buy it now (with above 1 lac discount) or wait for the execution of FTA?

Thanks
Ayush

[patil]

will this happen before the launch of the audi q3 and if it happens how much should the audi q3 cost ex showroom.

[Ricky_63]

When I first started this thread there were many members who thought this will not come thru, but it seems like it has !!!

Let us see what benefit exactly - the customer gets



Cheers

[avira_tk]

This will be another dud treaty with no benefits for India, the prices of alcohol might come down, car makers will use this to get higher margins. Lowering prices on a car, especially premium badges will affect brand image. I don't think a 12 Lakh Audi is around the corner, whatever the claims being made now.

This treaty will be a bad and as much SIAM is an industry lobby, they have a point. The manufacturing space is not something we can compromise, European companies have massive capacity(unused, given the economic crisis there) and it can be used to wipe out manufacturing here. The government should stick with the policy of encouraging investment instead of imports/screwdriver operations.

[scofield]

Pay just 10% import duty on the CBUs as per the latest free-trade agreement being negotiated between India and EU.

Source : ET.


NEW DELHI: Cars manufactured in the European Union, including luxury makes such as Porsche and BMW, could be available in India at prices only marginally higher than in Europe as the government is likely to agree to a 10% duty on a fixed quota of cars imported from the EU as part of a free-trade agreement being negotiated between the two sides.

India is considering allowing imports of 2.5 lakh car on which only a 10% tariff will be levied, compared to the normal rate of 60%, marking the first significant challenge the heavily protected Indian automobile industry has had to face from imports. The imports will be spread over five years, starting with 40,000 cars in the first year and rising by 5,000 units every year thereafter.

"We may bring down tariff to a low level of 10% for a fixed quota of cars every year for five years. We think our industry can deal with this," a government official told ET.

New Delhi is also considering reducing import tariffs by half from 60% to 30% for cars outside the quota once the proposed India-EU free trade agreement is implemented.

The EU is keen that India commit itself to extending the liberalized import regime for the quota of 2.5 lakh cars beyond five years, but New Delhi has said that it will review the situation after five years.

"We want to keep some room for maneuver if the need arises,' the official said. Greater market access for automobiles, wines & whiskies is on top of the EU's wish list for the FTA, formally called the bilateral trade and investment agreement.




In exchange, India expects to get more visas for its professionals, a relaxation of EU norms that require manufacturers keep elaborate database on chemicals used in their products.

India's wishlist also includes recognition as a data secure country for carrying out off-shore operations, a quality certificate for its herbal products and lower duties on labour intensive products such as leather and textiles.

The concessions on automobiles and alchohol, if they form part of the final agreement, will be unique as they are absent in similar agreements it has entered so far with countries like Singapore, Japan, Malaysia, South Korea, Sri Lanka and the ten-member Asean.

The Indian automobile industry has criticized the government's move to liberalise imports.

SIAM has warned that imports will deter investments as foreign car makers would prefer to export their cars to India rather than set up manufacturing facilities.

French carmaker Peugeot has put off its plans to invest in India, reportedly, in the hope of reaping benefits of lower duties once the India-EU FTA gets implemented.