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Budget 2018: 15% import duty will make vehicles assembled in India costlier

The government also raised custom duty on specified parts/accessories of motor vehicles, motor cars, motor cycles from 7.5 per cent to 15 per cent

Press Trust of India  |  New Delhi 

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Imported trucks and buses along with cars and motorcycles assembled in with components fully shipped from overseas will become costlier with the government today hiking the custom duty.

In the for 2018-19, Minister increased custom duty on CKD (completely knocked down) imports of motor vehicles, motor cars, motor cycles from 10 per cent to 15 per cent.

Further, duty on (completely built units) imports of motor vehicles (trucks and buses) has been hiked from 20 per cent to 25 per cent.

The government also raised custom duty on specified parts/accessories of motor vehicles, motor cars, motor cycles from 7.5 per cent to 15 per cent.

Besides, imported duty on truck and bus radial tyres has been increased from 10 to 15 per cent.

Justifying the move, Jaitley said there is substantial potential for domestic value addition in certain sectors, like food processing, electronics, components, footwear and furniture.

"To further incentivise the domestic value addition and Make in in some such sectors, I propose to increase customs duty on certain items," the minister said.

When contacted, Society of Manufactures (SIAM) told that the move to increase duty on components would impact the entire automobile industry.

"Since every company has to import some kind of components, the increase is going to impact everyone. Companies with greater exposure to imported articles would be impacted more," Sen said.

The move would, however, support government's Make in initiative, he added.

However, the (ACMA) welcomed the increase in duty on select components.

"The component sector is delighted that the duty on select items such as engine & transmission parts, brakes and parts thereof, suspension and parts thereof, gear boxes and parts thereof, airbags etc have been enhanced from 7.5/10 per cent to 15 per cent," ACMA said in a statement.

These items account for more than 50 per cent of $43.5 billion domestic component industrys turnover and over 30 per cent of its $11 billion exports, he added.

"The industry is extremely competitive in these areas and this measure will not only encourage investments but also encourage development in these areas," Minda said.

Welcoming the move to hike duties on imported truck and bus radial tyres, Chairman said it would help domestic manufacturers.

said that increasing the turnover range of MSME companies from 50 crore to 250 crore to pay a standard corporate tax rate of 25 per cent will benefit nearly 8,000 component players as nearly 90 per cent of these fall under MSME category.

EY India Tax Partner Automotive sector said that with a view to promote the Make in India programme the customs duty rates have been increased on automobile parts, and SKDs.

"However, there has been no extension of direct tax benefits for R&D which was much needed keeping in perspective the upgradation to BS VI emission standards," he added.

First Published: Thu, February 01 2018. 17:30 IST
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