Import duty on autos soon

NEW DELHI, AUG 10: The new automobile policy which is likely to be announced by the end of this month would, however, be in alignment with...

NEW DELHI, AUG 10: The new automobile policy which is likely to be announced by the end of this month would, however, be in alignment with the WTO agreement, Minister of State for Heavy Industries Vallabhai Kathiria said.

The Government is proposing to impose two slabs of import duty for used vehicles – one for vehicles less than five-year old and another for vehicles beyond five years.

It is also planning to impose a countervailing duty on the used vehicles, he said adding there would be some restrictions relating to emission norms and safety standards.

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With the scheduled lifting of quantitative restrictions on vehicles by next April, domestic industry has been apprehensive of cheap imports and imposition of import duty is the only way out for the Government to ensure a level playing field.

The new policy would continue with the provision of memorandum of understanding with foreign manufacturers which stipulates increasing levels of indigenisation and import neutralisation over a five-year period.

The enforcement of 50 per cent indigenisation in two year and 70 per cent indigenisation in the next three years will continue, Kathiria said.

According to the existing MoU policy, foreign manufacturers setting up base in India have to export components and vehicles to neutralise foreign exchange outgo for importing components.

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"The focus of the policy would be to maximise exports of automobiles from the country," Kathiria said.

On the existing vehicles which are non-compliant with Euro emission norms, the Minister said the policy would outline a time-bound programme to phase out the old vehicles.

Kathiria said that the Government had no plans at present to divest its stake in Maruti Udyog but added that "we are keeping an open mind on this issue."

As part of the government’s move to make the policy more acceptable, the Minister said it had invited suggestions from various automobile associations including Society of Indian Automobile Manufacturers (SIAM), Automobile Component Manufacturers Association (ACMA) and Automobile Research Association of India (ARAI).

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SIAM in a paper submitted to the government, has suggested segment-wise strategy for formulating the new automobile policy taking.

Since the various auto segments are significantly different in terms of maturity and competitiveness, the auto policy will have to be customised to individual segment needs, the Association said.