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New CKD norm may hurt entry of high-end products
10 March 2011: The new definition for completely knocked down (CKD) units of vehicles introduced in the Budget for 2011-12 will significantly increase the cost for high-end players and also hamper introduction of new products, opines Society of Indian Automobile Manufacturers (SLAM).
In the Budget for 2011-12, Pranab Mukherjee, Union Finance Minister, had redefined the meaning of CKD units, ostensibly to encourage local production of automobiles, which may alter the rate of customs duty on different imported parts.
“A definition for ‘CKD unit’ of a vehicle, including two-wheelers, eligible for concessional import duty is being inserted to exclude from its purview such units containing a pre-assembled engine or gearbox or transmission mechanism or chassis where any of such parts or sub-assemblies is installed,” the Budget document read.
Currently, luxury segment players including BMW, Mercedes Benz and Audi rely heavily on the imported CKD route to sell their products in India. CKD units attract a basic customs duty of 10 per cent, over and above other levies of about 30 per cent, which takes the total duty to about 40 per cent.
Source: Hindu Business Line