There have been reports lately on India offering discounts to European auto manufacturers for the purpose of free trade agreement. The Japanese auto firms are also keen that India marches on the same platform by rolling out concessions to the Japanese market fitted in the Indo-Japan Federal Trade Agreement (FTA). Auto makers like Toyota, Honda and Maruti Suzuki which account for over 50% of the market share in the Indian auto segment is perturbed by the excise duties proposed by the government to minimize duties on luxury cars as per regulations by Indo-EUFTA. They are also nudging India to impose duties on the luxury car segment in Japan.
Addressing the media on this issue, Mr. Hiroshi Nakagawa, the managing director of Toyota India announced, ‘’we have to acquire sufficient profits. A similar strategy should be imposed on the Indo-Japan Federal Trade Agreement to cater to equal work power to all firms. Japanese firms will undergo negative impacts if India vouches to offer discounts to European firms.
Honda Car India responded to this concession issue as well, Mr. Jnaneshwar Sen, the senior Vice President of Marketing and Sales at Honda stated, ‘’there must be viable market scenarios and efficient approach to this matter. If the government aims to minimize import duties on cars from the European segment, the same policy can be applied to Japanese car firms.
The Indian government has made a proposal for European firms to reduce import duties on luxury cars, in accordance with the proposed judgment on free trade agreement. If this offer comes through it would aid European auto firms to sell their powerful brands at consumer centric prices. The reigning luxury cars such as Mercedes Benz would come with a price of Rs 1 crore lesser than the original price. The Society of Indian Automobile Industry (SIAM) has not agreed to the Indo-EU free trade agreement and stated that it could have a negative impact on the Indian auto segment. This policy could hinder the progress of the Indian economy, auto companies and users.
The import duty on the completely built unit segment is 75%, which could increase to 120% when annual duty charges are imposed, along with VAT and other charges. A recent report by union budget incurred a 100% raise on import car duties which could lead to increased prices.
The proposal of Japanese firms to sought reduction in import duties could be a profitable move, it is still unclear whether this policy will yield fruitful results since auto companies in India are disturbed by the excise duties imposed on luxury cars and with cars with engine capacities of over 1.5 liters. The initiative to offer concession on import duties for Indian cars together with the excise duties imposed by the Indian government could raise the price of car models in India since the companies will already have to pay high tax. This could hinder profit sales to some extent. Let’s wait and watch what happens.
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I am into the auto blogs field for quite a long time. Living my passion of reviewing cars.
Tagged: Import Duties
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