Business Report on imports of cars to Brazil or India with recommendation
The theory of National competitive advantage gives Brazil and India an edge in the automobile industry and importation into either of the two countries would require well analyzed market research and supporting strategy.
Brazil’s current import policies, tariffs, restrictions and incentives
Muller, J. 2012(pp. 46-48) forecasts sales of cars will increase 68% from 3.4million units to 5.7million in brazil by 2016.The importation of cars not manufactured and do not own plants in Brazil have been hit hard with an increase from 25% duty fee to 55% increase and other charges, policy that could see a rise year after ...view middle of the document...
There is no incentives given to car importers into the India
Auto policy of India which was enacted to create a global competitive automobile industry made them set restriction and stiff conditions which are aimed at establishing a globally competitive automobile industry . A 100% duty charge on assembled cars in whatever condition it is imported has created a high barrier for importers of automobile. Policies have been enacted to protect the local automobile manufacturing industry with incentives only for firms who manufacture cars from scratch in India, this is to promote competiveness in the auto industry and also to enhance foreign direct investment.
Exim policy of India is harsh on importers with several rules like cars to be imported must be from the manufacturing country and also not be sold and must be a right hand drive and other regulations. The import of new vehicles is allowed only through few Ports (NhavaSheva Mumbai, Calcutta and Chennai).
Potential of the market
Brazil and India has recently offered incentives to manufacturing companies with more restrictions on import of cars to boost the offer incentives for local production and this has negative impact on the imports of cars to both countries but Brazil still has a better market potential. There are evidence (Euromonitor International 2012) the social political risk of India is high in contrast to that of Brazil who has a more stable environment and better economic performance compared to that of India The environmental Risk in India is way higher than that of Brazil. Both countries only have good roads in their major cities while roads in the rural areas have potholes and lack maintenance. The Global edge country comparator shows purchasing power Parity of Brazil is higher than that of India and higher percentage of middles class compared to India which has 2/3 of its population living under the poverty line, Inflation 11.992% compared to that of Brazil’s 5.038% .It is worth to note that wages of the workers in the brazil auto industry has increased by 125% and even at that the auto industry is still very competitive and more firms are either importing cars or starting up manufacturing plants in Brazil, the government’s commitment to primary fiscal surpluses has instilled confidence in the economy. The stimulus measures to boost the purchasing power with tax cuts and lower interest rate in place which has been extended to December 2012 has seen an increase in car sales. According to Roland Berger Strategy Consultants (2012) Brazil is the fourth largest car market and the seventh largest automobile maker with an annual output of 3.4million a market that could see Brazil becoming third behind China and USA. Brazil is recommended.
Documents required for importation
Bank Document Bill of Entry
Bill of Lading Bill Lading
Cargo release order Cargo release order