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Spare parts to get cheaper from Jan 2013
The new year is expected to give automobile industry some respite, as import tariffs for critical components imported from the Asean block, India's largest trading partner, are slated to halve from January, thus cushioning the impact of incessantly rising costs of auto components. Automakers were reeling under a hike in prices on five occasions in 2012.
Carmakers such as Toyota, Honda, Suzuki, Ford and Nissan are likely to be the key beneficiaries when the lower tariffs kick-in. The lower tariffs will cover major components such as brakes, gears, airbags, fuel tanks, suspension system, steering systems and seat belts. The tax will be halved to 5% from January onwards, from the existing 10%. The tax would finally be eliminated when total exemptions under the Indo-Asean free trade agreement (FTA) for these critical parts take effect in December 2013.
Toyota Kirloskar Motor deputy MD (commercial) Shekar Viswanathan told ET, "It's a big relief to maintain a healthy cost structure. The benefits coming from lower cost would help us improve our bottom lines, which are under considerable pressure due to currency fluctuations. But these reduced tariffs may not be enough to offset the impact of the depreciating Indian rupee that has forced us to increase prices from next month."
Carmakers in India in a domestic market dominated by the Japanese automobile manufacturers account for over 50% market share. These companies import several auto components from Thailand and Japan. They also export many critical components and cars to these markets - Maruti Suzuki exports loose components of its multi-utility vehicles Ertiga to Indonesia. It is also planning to increase its trade with more countries in South East Asia.