Import Tariffs to Drop Down by 5 Per Cent; International Automakers to Benefit

Automakers have been under a lot of pressure lately with the constantly rising auto parts tariff on critical components. There have been as many as 5 separate occasions where the tariff rates were hiked in 2012. And now automakers can breathe a sigh of relief as import tariff on auto components is set to come down to half the cost. It is expected that international automakers like Toyota, Honda, Ford, Nissan and Suzuki will benefit the most from this.

Components that come under these soon-to-be halved tariff rates are gears, brakes, fuel tanks, airbags, steering systems, etc. and will soon face only half the usual tariff rates. Currently the tariff levied on these auto components is 10 per cent and effective from January, this percentage will be cut down to 5 per cent. Toyota Kirloskar Motor deputy MD Shekar Viswanathan stated, "It's a big relief to maintain a healthy cost structure. The benefits coming from lower cost would help us improve our bottom lines, which are under considerable pressure due to currency fluctuations. But these reduced tariffs may not be enough to offset the impact of the depreciating Indian rupee that has forced us to increase prices from next month."

SIAM also made a statement on how this drop in tariff will help with cost-control in the long term, "There has been direct impact from the fluctuating currency and high commodity prices. Lower tariffs would help in cushion some impact of such rising costs and make the Indian industry globally competitive.”

Source - ET