In a move to protect its domestic automotive industry, the SA Department of Trade, Industry and Competition (DTIC) is proposing tariffs of up to 50% on vehicles imported from China and India.
Forming part of the BRICS (Brazil, Russia, India, China, South Africa) group of developing economies, India and China are now the world’s top two manufacturing hubs and accounted for 53% and 22% of South Africa’s vehicle imports, respectively. This equates to respective import increases of 368% and 135% over the last four years.
Particular emphasis has been placed on the lucrative entry-level passenger-vehicle segment, where competitively priced Chinese and Indian imports have compressed margins for domestic producers.
Ayabonga Cawe, the commissioner of International Trade Administration Commission (ITAC), recently told lawmakers in Cape Town that an amendment to South Africa’s present tariff schedule to bring import levies in line with World Trade Organisation (WTO) is among the plans under consideration.
“For completely built-up passenger vehicles, the bound rates (the maximum legally binding tariff levels to which a WTO member country agrees) are at 50%, our duties are at around 25%,” said Cawe. “On components, there is some room for manoeuvre – depending on the origin market – of between 10 and 12%”, he continued. For context, the current import tariff rates on OEM parts imported from India stands at 20%.
While these plans are being considered, it’s likely that the SA DTIC will consult with the National Treasury on tax-related avenues to lessen the impact of imports to our market. These could include a review of existing trade rebate credit agreements and possibly the introduction of excise duty on new luxury vehicles.
Click here to browse thousands of new and used vehicles here with CARmag!
