[Aroy]

Originally Posted by EssYouWe

It is a sad day for India when we bend under the pressure of some small Automobile companies.

CKDs are universally defined as the way it had been. There was no reason for the roll back.

Good to know that companies will keep minting money and we'll ensure no industrialization happens in India.

By the way, for the people who feel that Indian components cannot be good enough for Audi: http://www.team-bhp.com/forum/indian...on-martin.html
Industry develops when the demand arises. I am sure that given a demand for premium parts, our industrial sector can take up the challenges.

Also, when engine components and gearboxes are falling under the FTA, why should they worry about sourcing components from abroad.

These companies will continue running small garages in the name of assembly lines.

1. Indian companies pay a lot in terms of taxes, hence the duties to have a level playing field.
2. CKD is Completely Knocked Down kits, not "assemblies" as in engines and gear boxes. Sub assemblies which are assembled to get whole pieces are CKD though.
3. If companies were really minting, MUL should have made huge profits (to the tune of at least 30% annually, but it is not that high).
4. Sundaram was supplying High Tensile Nuts and Bolts to GM for at least 20 years. Others are supplying forged parts, radiator caps and other components. Though most of the components exports are low tech.

The problem with Indian manufacturing is metallurgy, amongst other things we lack manufacturing facilities for High Strength sheet steel, special steels for gears as well as metals for tank tracks. Still our industry has tried to set up local manufacturing of gears using imported stock.

Originally Posted by shankar.balan

My submission still remains the same.
Why should an Indian, be forced to pay roughly double the price for the same car in India, as compared to a foreign country. If these big international auto companies are really serious about India and increasing their market penetration they should definitely consider creating a proper assembly line for their vehicles including the tech bits like the engine etc. After all, we have no dearth of first class engineering talent in our country!
I just dont like the fact that abroad one can happily buy a BMW 3 Series for about 15-16 lacs on the road whereas in India the same thing would cost about 30 lacs on road. And we guys are forced to be pleased about a useless, stripped down X1 which can be "achieved" at 21-22 lacs!! Difficult to digest the pricing.

Blame it on the various taxes on Indian Manufactured goods. As I have said, cascading taxes make up half the cost of ex-show room price of a car. It is not only the direct excise duty on the fully built car, but that on components and sub assemblies sourced from vendors that contributes to this high rate.

[harimakesh]

IN india the maximum combined tax for anything should not exceed 25% in totality. In case of car after paying 25% total tax one must drive on road directly taking the customary vehicle ID number that is universal for the whole of India.

[airbender]

Originally Posted by airbender

On a different note I can't believe govt has the guts to take on the auto industry. Is this the same govt which didnot come up with health standards on soft drinks for almost ten years now. Let's wait and see.

What I said turned out to be true. This govt did not have the guts to take on the auto industry. A TOTAL SHAME

[EssYouWe]

Originally Posted by Aroy

1. Indian companies pay a lot in terms of taxes, hence the duties to have a level playing field.

Which is why I say they should stay. I think we agree on this point.

2. CKD is Completely Knocked Down kits, not "assemblies" as in engines and gear boxes. Sub assemblies which are assembled to get whole pieces are CKD though.

CKD, globally, is definitely not a kit which can be simply screwed together. CKDs are meant to be a stepping stone to complete localisation. They are also expected to provide employment to the local population, though not to the tune that a local manufacturing facility would. However, if CKD duties continue to make more financial sense (as they do at 10%) no company will go for localisation. Especially not companies that yearn for a pseudo-premium image and make people pay 30 lacs for a product that does not cost more than 15 lacs abroad.

3. If companies were really minting, MUL should have made huge profits (to the tune of at least 30% annually, but it is not that high).

I am talking about companies like BMW, Audi and Merc. Companies that continue to sell their products overpriced under the garb of CKD duty.

4. Sundaram was supplying High Tensile Nuts and Bolts to GM for at least 20 years. Others are supplying forged parts, radiator caps and other components. Though most of the components exports are low tech.

The problem with Indian manufacturing is metallurgy, amongst other things we lack manufacturing facilities for High Strength sheet steel, special steels for gears as well as metals for tank tracks. Still our industry has tried to set up local manufacturing of gears using imported stock.

If you saw the link I shared, it clearly quotes an example of a firm supplying parts to Aston Martin. I guess it doesn't get any more premium than this.

Also, industry develops, but only when there is a market for their products. By denying them a market, we are not providing them any impetus to advance technologically.

Blame it on the various taxes on Indian Manufactured goods. As I have said, cascading taxes make up half the cost of ex-show room price of a car. It is not only the direct excise duty on the fully built car, but that on components and sub assemblies sourced from vendors that contributes to this high rate.

With GST coming in sooner than later, I do not see this as a huge concern anymore. Also, excise duties always have a cascading effect. I do not recall an exception to this rule.

Cheers

[Yeldo]

There have been reports on some news channels that the government is NOT making a U- Turn in its CKD policy. The speculation is that there would be a downward revision in the tax rate, but the conditions stay. The newsmen also suggested that it was not a revenue measure, but a move to prop up manufacturing. Back to a square one again.

[ajmat]

Meanwhile, all the manufacturers are making hay with the panic buying that is happening

More here

[diffsoft]

Originally Posted by ajmat

Meanwhile, all the manufacturers are making hay with the panic buying that is happening

More here

I can imagine pre-owned cars selling for more that what they were bought for after this comes into effect! Dealers may not want to sell and may want to hoard - interesting times

[asr245]

I hope they haven't/don't cave in. Though it would make sense to delay it or not put it equivalent to CKD from day zero. Instead of 60%, it would be 20%-30% for these semi-CKD operations, increasing every year thereafter.

[xingamazon]

Like I mentioned before the govt and India will be ultimate looser if any such similar rules comes into place. Its funny they are not having brains to think of something called as conducive environment.

I did come to know what even BMW is now muling of exit similar to the Audi. There are lots to follow suit keep waiting.

[asr245]

Originally Posted by xingamazon

Like I mentioned before the govt and India will be ultimate looser if any such similar rules comes into place. Its funny they are not having brains to think of something called as conducive environment.

I did come to know what even BMW is now muling of exit similar to the Audi. There are lots to follow suit keep waiting.

From what I read in TOI yesterday, BMW is pushing the government to put a timeline for this and not an immediate implementation. They do not talk about exit (like VW group) just delayed expansion.

If they decide to leave, it's there loss, not ours (as long as our economy grows at current pace or more).

[EssYouWe]

Originally Posted by xingamazon

Like I mentioned before the govt and India will be ultimate looser if any such similar rules comes into place. Its funny they are not having brains to think of something called as conducive environment.

Conducive for what?

If they leave, I am in favor of throwing VAG out completely. There are enough companies to fill the void.

[viana]

I do agree that the decision to have the tax structure changed is correct. for how long can these companies hide behind low volumes as justifications for not investing in the a plant and being clear about a long term commitment. As HKAP pointed out, if we were to pay 15 L for a A4, how many of us would queue up? Agreed that the govt will not earn more taxation out of higher taxes but the fact that the same leads to investments, which in turn would yield indirect tax to the govt is the massive.

I hope that the manufacturers would take this as a positive side to set up India as a base.

Classic example of the same result is Mercedes.

[Yeldo]

So, the Volvos and Jaguars shall be bargains in the market?

Audi are still selling the Q5 for the same price as when it was a CBU. Don't know whether CKD operations are limited to the 2.0TDI Q5 only, though.

[ajmat]

in today's MInT, there is an interview with the India Head of Volvo cars. he claims that it is cheaper to go CBU route rather than CKD as there are no double overheads

[pgsagar]

Audi exiting? But they just got here!