Toyota Kirloskar Motors (TKM), the Indian subsidiary of Japanese auto giant Toyota, is in the process of identifying export markets for its small cars to be manufactured in India as the company has planned to avail themselves benefits under Export Promotion Capital Goods (EPCG) scheme.
According to Export Import Policy of India 2004-2009, the EPCG scheme allows import of capital goods for pre-production, production and post-production at 5% customs duty, subject to an export obligation equivalent to eight times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of eight years reckoned from the date of issuance of licence. However in respect of EPCG licences with a duty saved of Rs 100 crore or more, the same export obligation shall be required to be fulfilled over a period of 12 years.
As there is shortage for quality car plant machineries in India, TKM, in which Toyota owns 89% stake while Kirloskar Group holds the remaining stake, is expected to import machineries and equipment under EPCG scheme for its Rs 3,200-crore second plant, which is under construction at the company?s existing 420-acre factory complex in Bidadi village near Bangalore. The upcoming plant will manufacture small car, starting from 2010-11.
If the company import machineries for reduced duties under EPCG scheme, it will be committed to export cars manufactured using the imported machineries.
Talking to FE, a top official attached to TKM, requesting anonymity, said, ?We will look at export markets as it is required for us to avail some tax concessions under the EPCG scheme. If we have to import machineries for our second plant, we can get reduced duties if we make an export commitment.? He said, ?To make that export commitment, we are currently studying the export market (for small cars).?
Further he said that the company is weighing options to export small cars to Brazil, Russia and China and some other Asian countries in the initial stages.