The Hindu Business Line : Homologation norms for imported cars altered

In a move that is likely to be a source of comfort for the domestic automobile industry, the Government has modified its policy on the homologation requirement for imported cars.

Homologation (test for road-worthiness) exemption would now only be applicable to imported new cars "that have a FOB value of $40,000 or more" brought in by individuals, companies and firms under the Export Promotion Capital Goods (EPCG) scheme.

In the mini-EXIM policy announced last month, the exemption was provided for import of new cars that have a CIF (Cost, Insurance and Freight) value of $40,000 or more.

Previously, the $40,000 and above limit was applicable on the landed cost of the car, however now only a car priced at $40,000 (about Rs 20 lakh) or above at country of origin would be allowed for import. Costs such as freight and insurance would be over and above this figure.

When contacted, the Director-General of Foreign Trade (DGFT), Mr L. Mansingh confirmed that there has been a modification in the policy for homologation of imported new vehicles. He, however, declined to elaborate on what prompted this move.

This step, however, would increase the threshold price level of cars imported into India with homologation exemption, thus providing some relief to domestic carmakers catering to the high-end segment.

Industry officials point out that this move would also enhance the feasibility of import of high-end cars (without homologation) from countries closer to India.

According to industry sources, the modification in policy was undertaken after domestic automobile industry bodies made representations to the Government stating that the relaxation in the import would be "a set back to the domestic manufacturing sector".

Importers seeking homologation exemption would also have to furnish a Type Approval Certificate of an international accredited agency from the country of origin for the car at the time of customs clearance. The DGFT has now delineated 34 such agencies whose certificates would be accepted in India.

Interestingly, most of the notified agencies are based in Europe and Central Asia, with only one Asian agency (Japan-based) in the list. The list makes no mention of testing agencies located in North America and South East Asia.

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