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Increase localization or import duty will be increased: Nitin Gadkari to Auto Industry

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To reduce the imports, increase localization and promote  ‘Atmanirbhar Bharat’, Nitin Gadkari, Union Minister for Road Transport and Micro, Small and Medium Enterprises said that the government might hike the custom duty on automobile parts to promote and boost local manufacturing. Gadkari said that they need to reduce imports and increase exports at a virtual annual technology summit of the Automotive Component Manufacturers Association or ACMA. According to him, the automotive industry of India has the capabilities of manufacturing goods without compromising on their quality and cost.

The import duty on automotive parts such as drive transmissions, chassis, brakes and steering has already been increased to 15 percent for the Union Budget  2021-22. This has been done to limit imports from China and boost the manufacturing of automotive parts in India. The finance minister also said that these parts are not critical for an automobile and are also available locally. This move is to boost local manufacturing.

Nitin Gadkari said, “Auto component industry is considered as one of the shining sectors to achieve the goal of Atmanirbhar Bharat and Make in India. It is because of the strong capabilities of the auto sector that the vehicle industry in India has been able to achieve a localisation level of around 70%. I urge both the auto component makers and the OEMs to increase localisation to 100%,” He highlighted the capability of the automotive industry and said that over 5 million employment opportunities have been created for the people through the domestic automotive sector. He added that the automotive industry has the capability to hire more than 25 million manpower who will be skilled in the future.

“The government is also looking at resolving issues related to the shortage of raw materials such as steel to encourage replacement demand and ease production challenges to support the automobile industry,”  Nitin Gadkari said. He also added that the scrappage policy plans to replace  10 million old and unfit vehicles that cause most of the pollution and the government is also deliberately working on framing the final vehicle scrappage policy.

Recently, there has been increasing in the CBU imports in India. Vehicles like Skoda Karoq and the Volkswagen T-Roc were brought to India as a CBU or Completely Built Unit. Both come under the category of mid-size SUVs such as the Hyundai Creta and the Kia Seltos. However, because both the SUVs were CBU imports, they were priced much higher than the competitors. For instance, the Volkswagen T-Roc was priced at Rs. 19.99 lakhs ex-showroom whereas the Skoda Karoq was priced at Rs. 24.99 lakhs ex-showroom.

Jeep India also used to import the Wrangler and the Grand Cherokee till now. But they recently announced that they will be shifting both the SUVs to CKD or Completely Built Unit which means that individual parts are being imported and the vehicle is then assembled in India. Recently, the CKD Wrangler was announced for India which will be going on sale on March 15 while the Grand Cherokee should follow suit soon.

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