EDITORIAL - Custom duty hike in India expected to cut imports of auto parts
New duty structure is expected to increase local production of parts used in engine, transmission, brakes, suspension, and airbags
In its latest Union Budget for financial year (FY) 2018/19 presented last week, the Indian government has proposed to double basic custom duty on import of certain key components such as engines, transmission, brakes and others parts from 7.5% currently to 15%. The government also increased custom duty on import of radial tires for bus and trucks from 10% currently to 15%. In addition, the government increased import duty on lithium-ion batteries, a key component used in hybrids and electric vehicles, from 10% to 20%. Besides, custom duty on vehicles assembled locally using imported completely-knocked down (CKD) kits is also increased from 10% currently to 15%.