Heavy Industries and Public Enterprises Minister Praful Patel today said his ministry has asked the Finance Ministry to give two years’ time to the auto industry to comply with the new import duty norms for completely knocked down units .

“We have sent a formal request to the Ministry of Finance with the request from SIAM. The industry is asking sometime to set up facilities to have more indigenisation,” Patel told reporters here.

He said the industry players are asking for two year’s time to implement the new norms.

“… And this we have forwarded (to the Finance Ministry),” Patel said.

In the Budget for 2011-12, Finance Minister Pranab Mukherjee had redefined the meaning of completely knocked down (CKD) units to encourage local production of automobiles. Subsequently, pre-assembled engines, gearboxes and transmissions were kept out of the ambit of CKD and now attract 30 per cent import duty as against an earlier duty of 10 per cent.

Industry body Society of Indian Automobile Manufacturers (SIAM) has been asking the goverment to either reduce the duty or give manufacturers more time to prepare for more localisation of parts such as engines, transmissions and gear-boxes before the new duty is imposed.

It had argued that the step by the government would make it commercially unviable for very low volume products. For the high-end segment players such as BMW, Mercedes and Audi, this will not only significantly increase the cost, but it will also become difficult for them to introduce new products.

While others were silent, Audi had stated that the new norms could force it to have a re-look at its India plans.

Patel said the move is aimed at encouraging indigenisation, but added: “Now this is a issue of the Finance Ministy to decide on. We do share some of concerns of the industry. According to them, it will take a year to have more indigenisation.”

Speaking at the unveiling of a concept hybrid sports car by BMW, the minister said India still has to learn a lot in hybrid and diesel technology, but a lot of progress has been made on this front.

Patel said the new diesel technology is no more “a pollutant tehnology” and “any tax should not be in the form of a penalty” on diesel vehicles.

Recently, the Delhi government imposed an additional tax on diesel vehicles, while Environment Minister Jairam Ramesh had in the past criticised diesel vehicles for causing pollution.

Source: PTI

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