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    Jaguar Land Rover to continue assembling cars in India, but highlights tax concerns

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    Jaguar Land Rover to continue assembling cars in India, but highlights tax concerns

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    Indian taxation continued to remain a concern for auto majors in the luxury segment, but the company's MD is confident of sustaining the growth momentum and keep hitting high double-digits for the next half of 2018.

    Jaguar Land Rover (JLR) will not stop assembling cars in India — yet. Rohit Suri, President and MD, JLR India, confirmed his company’s decision on Wednesday.
    “We are continuously evaluating the situation, and it (continuing assembly in India) should make overall sense,” said Suri, speaking exclusively to CNBC-TV18. “We will continue assembly in India, and as of now there are no plans to stop.”
    In March, JLR India Limited admitted that it was considering suspension of its assembly operations in India on account of the hike in customs duty on CKD (completely knocked down) kits for motor vehicles.
    Under the CKD route, car-makers import components for vehicles, which are then assembled locally. Earlier this year, finance minister Arun Jaitley announced that customs duty would be hiked from 10% to 15% for completely knocked down parts of automobiles.
    Taxation in India remains problematic
    Suri, however, adds that taxation in India continued to remain a concern for auto majors in the luxury segment.
    “It isn’t only customs duty, but also high GST that is constricting the (luxury) market in India,” said Suri.
    “The overall market is just 41,000 to 45,000 units, which is just one percent of the overall passenger car market of three million. High taxation is not allowing these segments to grow, and that is of concern to us,” he added.
    In April, other luxury carmakers had also voiced similar concerns on customs duty hike, with Audi predicting flat growth projections, and Mercedes claiming that sustaining growth momentum in Indian markets would be a challenge.
    In September 2017, Hyundai Motor India said that a GST Cess of 7% on SUVs would affect demand for the segment.
    Healthy growth, still
    What will come as music to JLR India’s ears though, is the fact that sales continue to remain strong. In the first half of 2018, the company sold 2,579 units registering a year-on-year growth of 66%. In the same period, Mercedes reported a 12.4% growth, while BMW sold 13% more cars.
    “This has happened mainly thanks to the strength of our products and our brands,” said Suri.
    “The Jaguar XE, Jaguar XF, Jaguar F-Pace, Discovery Sport and the Range Rover Evoque are doing extremely well. That has helped us achieve this kind of a growth in the market”
    Jaguar Land Rover India now hopes to sustain this growth momentum and keep hitting high double-digits for the next half of 2018. Crucial to these plans, will be a localisation drive that the company’s engineers will utilise to keep costs in check.
    JLR is also readying for a 10-car product launch, largely facelifts and model changes, by the end of FY19, which is on track.
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