It has been duly noted that in the current Union budget provisions that Completely Knocked Down units or CKD units would have the same duties as Completely Built Units (CBUs) been brought in. This has created a furor in the automobile sectors with majority of the luxury car manufacturers in India relying on the CKD route and accordingly pricing their products. CKD units only attract basically an extra 40% duties however the CBU units attract 105% duties.
Vishnu Mathur, SIAM’s Director-General talks are going on with the Government’s financial body and there are hopes that the government would take heed of the automobile industry’s needs. He further added that were it not to happen, the foreign companies would be very reluctant to introduce their new products in India and moreover, after a few years, they might even pull out of India. The Government on the other hand, wants to provide employment to Indian people and hence want the engines, transmission and chassis to be assembled here rather than being imported. But the catch lies in the fact that all the foreign products don’t rake in good numbers as to allocate a manufacturing line for them here in India. Due to theirs been a low volume product, most of the foreign companies prefer to bring in completely built units or rather ship them in parts and assemble them in India.
German luxury car maker has already voiced their concern over the same and have even thrown a veiled threat to the Government of India. Audi said that they would actually limit their investments in India and as discussed earlier, even pack their bags and leave the country in a few years. Audi’s chief for global sales, Peter Schwarzenbauer mentioned that if the government is thinking on a short term strategy, then it should be fine however if it is for a long term planning, then all plans would go awry and it would mean more and more foreign companies pulling out of the Indian market. Hike in the duties would mean price hike of over Rs10 lakhs for each of the luxury car makers products.