A Shock from a corner of the Budget Paper
The economic times reports that there was a provision tucked away in a corner of the budget paper that could spoil the party for a section of carmakers especially multi-national companies such as BMW, Audi and Mercedes, that otherwise were rejoicing with other players in the auto industry over the Finance Minister sparing a hike in excise duty.
“A definition for ‘CKD unit’ of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts
or sub-assemblies is installed.”
In simple terms, this implies that auto companies that are doing CKD business in India with fully-imported pre-assembled critical parts like engines or gearbox or transmission cannot claim the lower 10% import duty on them as these will no longer be defined as CKDs. This would bring these vehicles at par with fully-built units and thus slap a hefty 60% import duty on them, which would go up to as much as 110% after the addition of counter-vailing duty, VAT and other local levies.
So from this we could understand that a change in the duty means drastic hike in the price. prices may rise in all entry level luxury cars such as BMW 3 series, Mercedes C-class, Audi A4 , the cheapest BMW X1 could become costlier well over Rs 8 lakhs and for Segment above that it would be still costlier. This may affect the growth of the Luxury car market which saw a very good growth previous year.
Even companies such as Toyota which do not manufacture engines locally including the newly launched Etios which are imported from Japan and Thailand. So the SIAM (society of Indian auto manufacturers) is seeking for clarification as early as tomorrow.
[Source: economictimes.indiatimes]
Hidden in the memorandum explaining the provisions of the Finance Bill was a point over what comprises a completely-knocked down (CKD) vehicle, or one that is just assembled here though being near-imported in its composition.
“A definition for ‘CKD unit’ of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts
or sub-assemblies is installed.”
So from this we could understand that a change in the duty means drastic hike in the price. prices may rise in all entry level luxury cars such as BMW 3 series, Mercedes C-class, Audi A4 , the cheapest BMW X1 could become costlier well over Rs 8 lakhs and for Segment above that it would be still costlier. This may affect the growth of the Luxury car market which saw a very good growth previous year.
Even companies such as Toyota which do not manufacture engines locally including the newly launched Etios which are imported from Japan and Thailand. So the SIAM (society of Indian auto manufacturers) is seeking for clarification as early as tomorrow.
[Source: economictimes.indiatimes]
Comments
Post a Comment