New Delhi: The ministry of road transport and highways is considering allowing foreign auto manufacturers to import 2,500 vehicles each annually to promote local manufacturing.
These vehicles will not require any certification from local authorities if they have already been certified as meeting domestic standards—or homologation—by the authorities in the country of manufacturing.
The move is expected to benefit premium car and motorcycle manufacturers who place a limited number of premium or specialised vehicles in complete or semi knocked-down form in the Indian market every year. But these vehicles need to be certified in India, which causes delays. The amendment seeks to address this problem.
The proposal is part of a 6 June notification amending the Central Motor Vehicle Rules 1989, whose draft will be open for stakeholders to comment for a period of 30 days.
A senior official said the proposed rules will help foreign auto manufacturers test the Indian market for their vehicles before taking a call on whether they can be manufactured locally, and even exported to other countries.
Under the proposal, foreign manufacturers can directly, or through their authorized Indian representatives, ship in a maximum of 2,500 completely-built units or semi knocked-down kits, if the components come with compliance certificates issued by an authorised agency in the country of origin.
This year’s budget increased taxes on imported automotive components to encourage auto majors to manufacture in India. But the move has had an adverse effect on the business of premium vehicle manufacturers.
“Almost 80% of the Indian automobile market is dominated by foreign companies and most of them do not bring their entire portfolio of products to India. The 2,500 unit cap is a very small number. This will help them test the domestic market and then decide on manufacturing it locally. This will boost Make In India," said the official mentioned above, on the condition of anonymity. The automobile industry is divided on the idea.
Some experts feel the move will help mid-range manufacturers like of Toyota, Renault and Nissan to bring more models into the Indian market, apart from premium vehicle manufacturers Audi, Mercedes and BMW.
R.C. Bhargava, chairman, Maruti Suzuki, said: “It is a good thing for the industry if the companies can check the acceptability of a vehicle in India, since it will save them a lot of money. It takes a lot of investments to develop and manufacture a car. So, this move would definitely help the investor and simplify business."
“The testing and certifying agencies in India are already overburdened. By allowing the companies to import 2,500 units of certain models, the government has allowed foreign manufacturers to test the Indian market with these products," said Puneet Gupta, associate director, sales forecasting, IHS Automotive.
However, an industry veteran, who did not wish to be named, was of the opinion that the move will not encourage local manufacturing in the long term.
“This will cut down the waiting period considerably and consumers will be able to experience the latest technology from the global market without waiting for long. Basis the consumers’ reaction and demand, we may look at scaling up our local operations as part of our Make-in-India initiative in future," said Charles Frump, Managing Director, Volvo Car India.
“One of the challenges we faced was the time and effort we use to spend on homologation. If this notification is finalized our customers will be benefited as we can launch new models, technologies and alternative powertrains in India." Rahil Ansari, Head Audi India said.