SIAM disappointed with the new CKD hikes

The new established rules by the Indian government for Completely Knocked Down (CKD) cars has become has upset every luxury car make. The increasing taxes in the Budget 2011-12 will result in increasing cost for the luxury cars and also put up a hold on the launch of new cars.

Vishnu Mathur, Director-General at SIAM said that the new budget suggets that if the company has to decrease the cost it has to assemble the cars locally which is not practical in case of very low volume cars. It will only result in increasing cost and will become difficult for the auto companies to launch new cars.

The 2011-12 Budget proposed by Finance Minister Pranab Mukherjee has changed the definition of the CKD to increase the local manufacturing of the cars. In the luxury car segment names like Mercedes Benz, Audi and BMW mainly look for the shipping of the cars via CKD route to roll out its cars in India. Completely Knocked Down unit lures an import duty of 10 per cent and the other taxes calculates to be a total of 30 per cent. It takes the total duty around 40 per cent. As per the report, Mr Mathur stated that SIAM is optimistic that the Indian government will take a premier step for the further progression of the auto industry.

In this regard, Audi few days back reported that due to the increasing CKD duties the auto company may have to pull its investments. The company has not ruled out the option and will come on a decision after the annual meet.

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