Tariff barriers on auto components bad for the long term, will raise input price, automakers say

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Components on which import duties have been enhanced include toughened and safety glass, parts of electrical lighting or signalling equipment, windscreen wipers, gas compressors, and parts used in suspension and braking systems, as well as those which go into steering and transmission.

Customs duties on these parts currently range from 7.5- 10 percent.

The top boss at Skoda Auto Volkswagen India agrees. "The increase in customs duty on certain auto parts to 15 percent will further increase input costs and prices for cars which depend on specialised components which cannot be manufactured locally due to unviable volumes," Gurparatap Boparai, managing director, SAVWI said.

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However, the Auto Components Makers Association indicated local players could take advantage of the raised tariffs in the short-term. "Increase in basic customs duty on select auto components will encourage local manufacturing of such items," Deepak Jain, president, ACMA said.

Automakers will have to assess the final impact of the enhanced customs duty and how it stacks up against the 7.5 percent duty on steel imports, to conclude whether the cost implication for customers will be positive or negative, and to what extent.