Government sources told TOI that the vehicles imported for testing faced levies of as much as 250% of the declared value, making Indian test agencies non-competitive.
Now, vehicles, specified auto parts, sub-systems and tyres that are imported by notified testing agencies for testing and certification will not face the levy, the Finance Bill introduced by finance minister Nirmala Sitharaman in Parliament has proposed.
The move is expected to benefit testing agencies such as International Centre for Automotive Technology (ICAT) and the Automotive Research Association of India (ARAI) which have received several requests from global players for crash tests, emission tests, as well a s tests for road track durability, teardown and others, including those related to tyres.
As a result, the ministry of heavy industries, which deals with the auto sector, approached the finance ministry for the concession, arguing that there will be no loss of revenue for the government and instead, Indian testing facilities will be able to compete with their rivals in the UK, Germany, China, Japan and Taiwan. With the duty concessions in place, the government is also toying with the idea of easing rules to allow the import of left-hand drive vehicles for testing purposes. Currently, they are not allowed to be imported into the country.
Officials said that the finance ministry and heavy industry ministry are expected to stipulate the conditions soon with the Directorate General of Foreign Trade also expected to review some of the provisions. With India turning into one of the fastest growing auto markets globally, the government is also keen to ensure that it emerges as a hub for components and testing in the coming years, which also help build a strong domestic ecosystem.