No concessions on car CBU imports for foreign firms

S Venkitachalam

New Delhi, Aug 21: THE government has told foreign companies that there will be no relaxation of the conditions regarding imports of completely built units (CBUs) of cars — now that the quantitative restrictions (QRs) have been removed, with effect from April 1.

Testing and other requirements prescribed for import of cars under the export promotion capital goods (EPCG) scheme of the current policy would stay, senior commerce ministry officials said.

Further, officials said that there were stipulations that cars would be permitted from the country of manufacture and that small volume imports of cars would be governed by homologation in order to ensure consumer protection, road safety and adherence to specified emission norms.

Some foreign companies had made representations to the effect that imports of cars be allowed in cases where they were being effected by their subsidiary companies based in India.

Officials said that post-QRs, imports of new cars in India had been subject to compliance with the provisions of the Motor Vehicles Act, 1988 and the rules made hereunder. The vehicles must have a speedometer, indicating the speed in km per hour and also have right hand steering and controls etc.

The government has also scrapped the auto policy under which a memorandum of understanding (MoU) was to be signed by foreign companies wishing to set up passenger car units in the country.
Under that policy notified in December 1997, 11 auto majors including domestic market leader Maruti Udyog, had signed MoUs with the director-general of foreign trade (DGFT).

Officials pointed out that new as well as second hand cars could now be imported by paying a customs duty of 88 per cent and 180 per cent, respectively.

That policy had required the auto companies to achieve broad neutralisation of foreign exchange over the entire period of the MoU by balancing the actual CIF value of imports of CKD/SKD kits/components and the FOB value of exports of both cars and components during this period.