Heavy industries and public enterprises minister Praful Patel on Tuesday lobbied in favour of luxury carmakers in India, seeking a two-year gap before import duties on components meant for assembly of cars in the country are increased.
Finance minister Pranab Mukherjee in 2011-12 Budget had redefined the meaning of completely knocked down (CKD) units that excluded pre-assembled engines, gearboxes and transmissions out of its ambit, to encourage local production of automobiles. CKD vehicles now attract 30% duty as against the earlier duty of 10%.
“We have sent a formal request to the ministry of finance to give two years’ time to the auto industry to comply with the new import duty norms for completely knocked down units,” said Patel.
For premium carmakers such as BMW, Mercedes and Audi, the increased duty will increase the cost while also scuttling plans to introduce new products. Audi has already stated that the new norms could force it to have a re-look at its India plans.
None of the carmakers have increased the prices of their vehicles yet but Mercedes last week said that it would have to do it in the near future.