SIAM (Society of Indian Automobile Manufacturers) expressed its intention to stand on its old decision of not letting the import duty go down on the big cars coming in India from the European Union. Along with this the SIAM stood up against the increase of excise duty on the production of big cars in the Budget of 2012-2013. The whole issue with this is that the Indian government has increased the excise duty by 27 per cent on the big cars manufactured in India and has cut down the duties on import of big cars from Europe to a major 10 per cent under the India-EU FTA (Free Trade Agreement). Mr. Sugato Sen, Senior Director of SIAM was of the opinion that the increased excise duty on big cars is done because it is apparently for the rich people to buy and own.This is one of the main reasons that Indian automobile industry is not able to develop a strong strength in designing and manufacturing big cars. But as per the latest news coming in from the FTA meet, Indian government has been considering seriously over the option of allowing the big cars from European Union to come to India at a low import duty. If this happens then the Indian Automobile Industry’s big car manufacturers will face a major setback.
Concession by the Indian government to the European Union for the automobile sector will completely depend on the agricultural package negotiation for India. Since India needs the access to the European markets for its agriculture products while the European Union needs access to the Indian automobile market for its big cars, it seems the negotiation will happen accordingly with both the parties trying to get as much benefit as they possibly could. It is also to be known that the Indian government will never give in easily to the demands of the European Union without considering the larger benefit of the Indian automobile industry.
In the recently passed Budget, the cars which would exceed four meters in length but will have an engine of 1200cc for petrol and 1500cc for diesel will have an increased duty of 24 per cent from the previous 22 per cent while Rs 15,000 will be a fixed duty to be paid. With a rise from 60 per cent to 75 per cent on the basic customs duty on completely imported vehicles which were priced over $ 40,000 with a good engine efficiency of more than 3000cc for petrol and 2500cc for diesel, it has become a heavy affair for the European Union to send big cars to India.
If the Indian government decreases the import duty on the big cars, it will definitely damage the business of the indigenous car manufacturers of India who are into big car construction. Let’s see what finally happens.