With the Budget 2012 not far away, all auto OEMs are cross fingered on the Government’s strategy towards the levying extra duty on diesel powered cars. Many OEMs like Renault-Nissan are heavily dependent on the diesel powertrains for their market volumes and any additional duty imposed on the diesel powered vehicles will surely cause a lot of suffering for such companies. The Society of Indian Automotive Manufacturers (SIAM) today protested heavily against any such hikes which the Govt might be contemplating in the forthcoming Budget.
SIAM also cited the example of the on-going Free Trade Agreement (FTA) between Indian and the European nations under which the import duty on CBUs and CKDs brought to the Indian market by the European OEMs would be drastically cut resulting in sheer drop in prices of the CBUs. SIAM opposed this move stating that such a cut on the import duties wouldn’t result in any benefit for the Indian auto makers.
“It is also a contradictory policy that while we are talking about discouraging production and use of large and diesel cars in India, for the same type of cars we will be reducing the import duty under the FTA and making imports cheaper,” SIAM said in a statement.
According to SIAM, in the period 2010-11, European Union had exported $3.4 billion worth cars as CBUs and CKDs to the Indian market as opposed to only $1.7 billion worth exports of cars from India. Last year, export of EU to India grew by 51% which includes 109% growth in car exports. This is very high as compared to 11% import from India to EU and a decline of 15% in car sales reiterating the Ministry of Commerce trade data that shows trade imbalance in the Indian automotive sector heavily towards EU.