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Against lowering of customs duty on auto in FTA with EU: SIAM

Economic Times, India

Against lowering of customs duty on auto in FTA with EU: SIAM

8 April 2011

PTI/NEW DELHI: Stating that incentives should be given for setting up manufacturing bases in the country, SIAM today said it opposes any lowering of customs duty on fully imported cars in the proposed India-EU free trade agreement.

"There is consensus in SIAM that as an industry body it will not support lowering of import duty on completely built units (of vehicles)," Society of Indian Automobile Manufacturers (SIAM) President Pawan Goenka said here.

India and the European Union have been in negotiations since June 2007 to sign an FTA, which is likely to be concluded this year.

The EU has been demanding lowering of import duty on automobiles, among others.

At present, CBU imports attract 60 per cent customs duty and when other taxes are added, the price of a vehicle increases by as much as 110 per cent.

Goenka said the idea behind opposing lowering of import duty on CBU import is to encourage manufacturing in India.

"We, however, support a gradual lowering of import duty on completely knocked down (CKD) units as it will lead to manufacturing in India as volumes for such vehicles increase," he said.

SIAM Director General Vishnu Mathur said the government should not lower the import duty till at least the period of Automotive Mission Plan, which is till 2016.

When asked about the recent imposition of higher duties on CKD kits, Goenka said: "We believe that this is a very harsh step for those who import engines and transmissions... We have once again requested the government to reconsider the decision."

Last month the government had halved the proposed customs duty on CKD kits containing pre-assembled engines and gear boxes of automobiles to 30 per cent from 60 per cent planned earlier during presentation of Budget for 2011-12 in February.