Mumbai: In yet another setback to Prime Minister Narendra Modi’s ambitious Make in India initiative, Tata Motors Ltd-owned luxury carmaker Jaguar Land Rover (JLR) said it will reconsider India assembly operations in the wake of the hike in customs duty on completely knocked down (CKD) kits.
“We will most definitely reconsider local assembly because the hike affects our pricing, volumes, and overall planning and investment decisions," said Rohit Suri, managing director and president at JLR India, adding that the company has been constantly hit by other increases in taxation, citing the goods and services tax (GST).
In the budget for 2018-19, finance minister Arun Jaitley hiked the customs duty on completely knocked down imports of motor vehicles from 10% to 15%, along with a hike in duties on specified parts of these vehicles to 15% from 7.5%.
Under the CKD route, components of a vehicle are imported to be assembled locally.
Another luxury automaker, Triumph Motorcycles India Pvt. Ltd, said it would discontinue assembly operations for its bikes in India if the government raises customs duty on completely knocked down (CKD) kits any further, Mint reported on 22 March.
Without disclosing specifics regarding the alternative to local assembly, Suri called for a relook at the customs duty rate and the GST since these are “not positive measures as they make it more difficult to justify investments".
“The market will get constricted unless the prices are at reasonable levels and we match customer expectations in terms of affordability," Suri added.
Nevertheless, JLR India will still aim for increased localisation because of the cost benefits. The company currently assembles close to half its portfolio, including the Jaguar F-Pace, Land Rover Discovery Sport and Evoque re assembled at its Chakan plant in Pune.