Table of contents list of acronyms
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| 6. TARIFF PROPOSALS The Government does envisage the reduction of tariffs in the automotive sector in a five year time frame, as per an earlier ECC decision. But this process does not seem to go far enough with only minor reduction in tariffs in the terminal year from the present level and large inter- vehicle differentials will persist according to this scheme of up to 70 percent. To reduce this spread the following recommendations are made for implementation in a medium-term setting i) The maximum tariff on vehicles should be brought down to 35 percent in a five year time frame. ii) The dispersion of tariffs among CBUs of vehicles should not exceed 15 percent in the terminal year with lower rates of 20-25 percent on trucks and buses and 35 percent on cars and motorcycles. iii) The same tariff rates should apply on cars of different sizes. However, in order to discourage luxury consumption, excise duty maybe applied both on CBU imports 7 and domestic production. The rate of excise duty maybe levied at 20 percent on cars with capacity of cc, rising to 60 percent for cars above cc. iv) The distinction between localised parts and non-localised parts needs to be removed in the tariff schedules, as is the casein most countries. In addition, SRO 656(1)/2006, meant for concessionary imports, must be withdrawn. These provisions have conferred considerable discretionary power to EDB and the Customs Department and led essentially to a reversion back to the licensing regime with scope for rent seeking. By 2016-17, the duty should be brought down to 20 percent. However, given apprehensions about the potential wide ranging competition from Indian exports in the automotive sector, we suggest that for the year, 2012-13, the present tariff rates largely be left unchanged. A subsequent review maybe conducted after an assessment is made of the actual impact on the industry following the granting of MFN status to India and the resulting expansion of trade. Download 0.77 Mb. Share with your friends:
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