The Hindu Business Line : Automobile imports post 90% growth

Import surge
Automobile imports as of April-November 2007 were up 90.4 per cent at Rs 744 crore against Rs 391.14 crore in the corresponding period last year.
Import duty on CBU passenger cars is 60 per cent and on CKD units is 10 per cent.

Priyanka Vyas

New Delhi, Jan. 25

Global car makers like BMW, Mercedes Benz, and Audi may have reason to cheer as the luxury car market continues to climb. But with auto imports being driven mainly by luxury cars and recording a phenomenal growth, there is concern amongst domestic auto players.

As per the latest official statistics on the sensitive list released by the Commerce Ministry, automobile imports as of April-November 2007 have reported a 90.4 per cent growth at Rs 744 crore against Rs 391.14 crore in the corresponding period last year. The industry attributes the surge largely to imports of completely knocked down units (CKDs) and completely built units (CBUs).

“The increase would be mainly due to import of cars in the A4, A5 and A6 categories with an engine size of 1,500-3,000 cc or above. The number of cars being imported in this segment has doubled, contributing to around 20-25 per cent of the overall passenger car sales in the country,” Mr Dilip Chenoy, Director General, Society of Indian Automobile Manufacturer’s Association, told Business Line.

At present, the import duty on CBU passenger cars is 60 per cent and on CKD units is 10 per cent. The industry is of the view that the CKD duty at 10 per cent is at acceptable level since foreign manufacturers initially start their operations in the country by assembling the imported units locally and gradually increase the indigenisation content. This leads to increased business for the domestic auto component companies. However, in the case of CBUs, since the entire car gets imported, the industry association is of the opinion that any further reduction in duty on CBUs would have adverse repercussions.

“Any effort towards reduction of duty either directly or through free trade agreements on completely built units will have an adverse impact on the domestic industry,” said an industry official who declined to be quoted.

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