Government declines to rollback duty on assembled cars

The Indian government has recently rejected the fresh appeal to take back the contrasting custom duty norms for assembled cars in India, said sources. It is worth mentioning that European Union earlier raised the demand of duty rollback on cars assembled in India and now German Chancellor Angela Merkel also requested the same while visiting India.

Government officials further reportedly said that the finance ministry has already communicated with European Union and other government departments and there is no chance of a review on rollback of differential custom duty. Officials also commented that Finance Ministry is trying to fill the gap due to which government has already lost several crore of rupees. And no review will be done regarding the same. Also, with an idea of changing the meaning of CKD units, which are assembled in India, the government raised the custom duty to 60 percent in first quarter this year but later it slashed it to 30 percent. It is worth mentioning that before the announcement of 2011-12 budget, the custom duty on completely knocked down units was 10%.

Currently, the Import duty on completely built cars is 60%, which rose up to 110% after the inclusion of other taxes like counter-vailing duty (CVD), VAT and other tariffs. Society of Indian Automobile Manufacturers already had protested against the addition of fully-built cars under the EU FTA earlier this year.

It is worth mentioning that domestic car makers are quite content with the Government's decision but it also created a gap between the industry players. Indian car maker giant Mahindra & Mahindra's automotive head Pawan Goenka earlier disagreed with the idea to lower the custom duty on imported cars but other key players like Audi, Mercedes and BMW, backed the issue.Some of the Global car manufacturing companies present in India which function in the lower-end of the market, debated against low tariff rates, and said that low price shipment in India is going to discourage the local manufacturing units and will not assist in creating jobs.