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Richa Mishra
Neha Kaushik

NEW DELHI, Dec. 20

IN order to hold its own in the globally competitive automobiles and auto components industry, the domestic players have urged the Government to correct the existing cost anomalies in the segment.

"It needs to be appreciated that Indian automobile companies operate in an environment which has higher costs; for instance, finance costs are about twice that of the rates in the international market," the Federation of Indian Chambers of Commerce and Industry (FICCI) in its pre-budget memorandum said.

State-level taxes and cascading impact of local levies together add 19 per cent to cost. Further, raw materials cost are higher due to high duties on basic raw material imports.

"It is understood that an Indian manufacturers' cost is higher by 33 per cent due to extraneous factors. It is important that the anomaly in this particular segment is corrected at the earliest," the industry said.

The industry pointed out that the tariffs on inputs for manufacture of commercial vehicles and tractors had a structure that discouraged higher value addition in India. Raw material import tariff on these products is between five per cent and 25 per cent, while tariffs on components import range from 25-30 per cent.

"The import tariffs on products in these categories are same regardless of whether the item is imported in semi-knocked down/ completely knocked down (SKD/CKD) or whether in completely built unit (CBU) or even in second-hand form. This is an anomaly which needs rectification in a manner that encourages local value addition against finished goods imports," FICCI said.

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