The Hindu Business Line : ‘No duty cut on completely built auto units under Indo-Asean FTA’

New Delhi, Aug. 7 Fears of the domestic auto industry have been allayed with the Government unlikely to reduce tariffs on the import of completely built units (CBUs) of cars and bikes during the upcoming Indo-Asean free trade agreement (FTA) negotiations.

Senior government official in the Commerce Ministry told Business Line, “There would be no tariff concessions on completely built units with regard to the FTA with Asean countries.”

He said that in the case of the auto component industry the Government was likely to maintain 50 products in the negative lists.

Negative lists

Currently, the Government has received negative lists from Malaysia and Thailand and hopes to receive the lists from other Asean countries in the ministerial meet to be held in the last week of August, he added. This would then follow a series of discussions in an attempt to implement the FTA from January next year.

The likely decision will be in response to the concern expressed by the domestic auto industry ahead of the official level talks that were held in Vietnam a few days ago.

The industry had opposed the Government’s attempt to include certain models of passenger cars and auto components in the sensitive list where tariffs were likely to be brought down to 5 per cent.

The proposed move was seen impacting the investment and competitiveness of the domestic auto industry.

Duty concerns

At present, the import duty on CBUs of cars and bikes stands at 60 per cent in addition to which other taxes amounting to 13-14 per cent are levied. This has led to companies like Daimler Chrylser, BMW, Hyundai, Ford, Toyota, Nissan-Renault set up their manufacturing base in the country to make the prices of their products competitive for the domestic market.

However, some of these original equipment manufacturers continue to import certain models due to slim volumes.

With most of these players having their manufacturing base in Thailand and other Asean countries, diversification of current investments in the domestic auto industry to these countries had been a matter of concern.

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