It seems like the auto industry in India is split over the import duty structure. Union budget is just around the corner, and the industry is speculating some amendments being made to the 60% import duty on automobiles which goes up to 110% after the addition of local taxes. The automotive industry body in India SIAM (Society of Indian Automobile Manufacturers) seems to be supporting the import duties. Their point is that restriction on direct import of automobiles and their components gives the domestic industry a boost. The auto industry in India may not have thrived had there not been these restrictions in place.
On the other hand foreign car makers, especially ones which operate in the premium segment want the duties to be lowered – at least for green, hybrid and premium vehicles. Their point of contention is that the local industry in India does not manufacture luxury or hybrid cars, so their interests will not be hurt if duties are lowered on such cars.
This tug of war has emerges after the news of India planning a trade agreement with the European Union. The government has been contemplating lowering of import duties on automobiles and related products, a potential move which has sparked the debate.
SIAM president Pawan Goenka thinks that the local industry’s inclination to keep the duty intact should not be equated to protectionism, as every country should ensure that trade does not hurt its local industry. Some companies like Mercedes support this theory for the small cars and the volumes segment, but want the duties lowered for premium cars, for which India is not a hub.
While there largely seems to be a consensus on duties being kept intact for the small car segment, premium car segment seems to be the bone of contention. What’s your take on this? Should the duty structure be left as it is even for the premium segment? Is there a chance that the move would inspire more investment in that segment in the country over time? Or should the duties be lowered in the premium / green segment to help make such cars available at a lower price? Do let us know.