The Indian government has inclined in the favour of oversees auto makers, Porsche and BMW, and has come up with an idea of levying 10 per cent duty on a fixed quota of models, which are imported from the European Union (EU). The move is taken in light of a free-trade agreement, which remains parallel with the consent of both the parties.
In the initial phase, the government of the country is considering to allow imports of 2.5 lac units, which will be benefited with the import duty of 10 per cent against the existing 60 per cent. With this decision, the Indian auto industry will now bank upon a number of decent models, which were earlier kept at bay, owing to a whooping import duty.
The new import plan will be divided in five consecutive years, with 40,000 deliveries in the first phase and thereafter, addition of 5,000 units every year. However, the government is also considering reducing its import duties to 30 per cent from the massive 60 per cent away from the quota.
A government official told economic times, “We may bring down tariff to a low level of 10% for a fixed quota of cars every year for five years. We think our industry can deal with this.” He further added, “We want to keep some room for maneuver if the need arises.”
On the other hand, EU expects India to extend its liberalised import regime for the sanctioned 2.5 lac units beyond the decided five-year term; however Delhi does not share the same view. As per reports, India plans to consider this suggestion after the completion of this tenure.
In the Free Trade Agreement (FTA), EU wants to liberalise the rate of automobiles, wines and whiskies, which will widen their market share in India. In consideration, the Indian government is anticipating to source more visas for its expertise professionals. If the negotiations came in existence on the part of automobiles and alcohol, it will be a unique contract since they are presently missing in agreements made with Singapore, Japan, Malaysia, South Korea and Sri Lanka.
In contrast, the industry experts have condemned the move of Indian government to reduce the import duty on products of foreign auto makers. The Society of Indian Automobiles (SIAM) has advised the Indian representatives that this approach will put off the investments made by them and would then favour importing their models in India in place of establishing their production facilities.
