Table of contents list of acronyms
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| Foreign Exchange Savings Derivation of foreign exchange savings is based on the comparison of a counterfactual scenario, in which there is no capacity for assembly of cars and other vehicles and demand is catered for fully with imported CBU units with the actual outcome when there is a substantial degree of import substitution. As such, foreign exchange savings can be computed as follows Foreign exchange savings = Value of imports of CBU vehicles - value of imports of CKD units and parts – value of imported inputs into domestic parts – investment – remittance of profits + exports of vehicles and parts .......... (1) The above magnitudes have been estimated for 2009-10. Determination of the c.i.f. prices of vehicles is based on, first the assumption that the level of import tariffs are effective in determining the domestic price. Therefore, in this case the domestic price is equivalent to the cif price + customs duty + general sales tax. The validity of this assumption is discussed in Chapter 5. In the high case, the domestic price is assumed to be lower and the cif component is correspondingly larger. Table 2.15 presents the magnitudes in equation (1). In the counterfactual scenario imports would have aggregated to between $1.7 billion and $1.9 billion. As opposed to this, 2 At the actual level of sales, estimated at world prices in $. 30 actual imports, investment and repatriation of profits in 2009-10 are estimated at $1.2 billion. Inclusive of exports, the foreign exchange savings by the sector are estimated at between $607 million and $859 million. Therefore, the sector contributes significantly to foreign exchange savings. Download 0.77 Mb. Share with your friends:
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