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Second-hand cars may attract higher duties - Views on News from Equitymaster
 
 
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  • Jan 18, 2000

    Second-hand cars may attract higher duties

    In what is seen as a move to protect the domestic auto industry from the threat of second-hand imports, the government is considering several measures to regulate second-hand imports including the imposition of a 40% countervailing duty. 570 100 500

    The government may decide to impose the 40% countervailing duty in lieu of central excise (on domestic cars). It may also impose an annual import ceiling and disallow imports of cars over five years old. It is also looking at a mandatory environmental assessment by a certified agency. These measures have been taken to alleviate fears voiced by domestic manufacturers who feel that large-scale second hand car imports could impact their sales volumes.

    The cabinet will mull over these measures, which will be announced finally in the Union Budget for 2000-2001. April 2001 is the deadline for India to phase out all quantitative restrictions on car imports. The government will use this period (15 months) to phase out restrictions completely and ensure that India does not become a dumping ground for second hand cars.

    When second-hand car imports become a reality, the government will have to adopt measures to curb dumping in the country. But it will have to be careful to ensure that these measures do not become a substitute for qualitative restrictions, in which case India's trading partners are likely to protest against such a move.

    While domestic manufacturers' fears are justified, second hand car imports are an inevitability that they will have to learn to live with. This will force them to adopt stringent cost-cutting measures to make their products more cost-competitive. Moreover, in the initial stages, their products will always enjoy an edge over imported cars as they will be able to give much better after sales service and spare parts will be more widely available.

     

     

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