Representatives of the Society of Indian Automobile Manufacturers (Siam) are expected to meet finance ministry officials this week to further discuss the new duty structure on the completely knocked down (CKD) kits, which they feel can hamper the operations of makers of premium cars. Consular officials from Germany, on behalf of luxury car makers like Mercedes-Benz, Audi and BMW, will also attend the meet.
As per a March 24 notification by the finance ministry, a customs duty of 10% would be levied on CKD kits with unassembled engine, gearbox and transmission mechanism, while a duty of 30% will be levied on pre-assembled engine or gearbox or transmission mechanism, but not mounted on a chassis or a body assembly. A 60% duty will be levied on any other form, said the notification.
The agenda for the meeting will be to derive to a consensus on the government’s objectives and the preparedness of manufacturers for this.
?We are still thinking about it (CKD duty announcement in the budget) and have not taken any decision yet,? said Vishnu Mathur, director general, Siam. He adds, ?As Siam, we encourage the rationale behind the move, which is to promote local content. However, there is a need to strike a balance. Not just German but Japanese as well as Indian companies looking at getting new vehicles as imports would be impacted. We should not look at local content promotion on the one end and at the same time, impact certain companies. There is a need to sit down and understand what can be achieved and the process to do it.?
?On the other hand, it is difficult to start localising from the very beginning of gearbox and engine with low volumes,? he explained.
Other than luxury car makers like Mercedes-Benz, Audi and BMW, the impact of the new regulation would be across various brands, depending upon models. For instance, Indian auto makers like Tata Motors and Mahindra & Mahindra (M&M) will take a hit on their plans to launch Jaguar Land Rover (JLR) and SsangYong Motor Company products through CKD route, respectively.