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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 year. Joan Muller 2012.(Forbes) Toyota Corolla, which sells for $16,230 in USA now has sticker price of $29,000 in Brazil. The Brazilian Government only gives incentive to carmakers with manufacturing plants in Brazil coupled with stability of central bank and its response to economic dynamics has been a driving force for foreign direct investment (FDI) in the automobile industry. Industry Forecast Scenario( 2012).Brazil’s duty tax and other tax levied on imports are high,domestic sales are taxed and it varies by state, these are few reasons why there have been a decline in imports of automobile .The table below shows the decline in importation, sales of new cars and market share of current importers of cars to Brazil '
Table from Brazilian Auto Importers Association (2012)

High imports mainly from China and South Korea has dominated the Brazil market as the table above shows. Kia holds about 32 percent of Brazil’s car import market. Although the total number of imports have reduced due to restrictions and increase on imports duty tax.

India’s current import policies, tariffs, restrictions and incentives
The Indian economy is distributed across a number of large metropolitan areas marked by distinct income with low purchasing power parity (PPP), in these light, it is a tough market for foreign companies to sell cars, importers faces significant challenges and would have to consider series of policies on importations of cars. 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

Brazil India
Bank Document Bill of Entry
Bill of Lading Bill Lading
Cargo release order Cargo release order
Commercial invoice Certificate of origin
Customs import declaration Certified engineer's report (technical standard certificate)
Entry invoice( Nota Fiscal) Foreign exchange control form
Packing list Inspection report
Technical standard/health certificate Packing list Product manual Terminal handling receipts

Table adapted from Doingbusiness.org
Nature of import procedures Duration(days) US$ Cost
Documents preparation 8 275
Customs clearance and technical control 4 450
Ports and terminal handling 3 500
Inland transportation and handling 2 1,050
Totals 17 2,275
Table adapted from Doingbusiness.org

Tariff calculator of Duty
Country MFN Duty rate Sales tax Additional duties and taxes Import restrictions
Brazil 55% 17% Storage fee(1% CIFD)

Handling fee(US$0.015 per KG)

Declaration fee(BRL30.00)

IPI(18% CIF) No restriction
India 100% 0% Landing charges(1% CIF)

Countervailing duty(22% (CIFD + Landing charges))

CESS(3% Countervailing duty)

Education CESS(3% (Duty + Landing charges + Countervailing duty)

Additional customs duty(4% (Duty + Landing charges + Countervailing duty) No restriction

Table Adapted from Duty calculator (2012)
REFERENCES
http://www.doingbusiness.org/data/exploreeconomies/india#trading-across-borders http://www.france24.com/en/20121005-brazil-unveils-fresh-auto-industry-incentives http://www.automotiveworld.com/comment/95781-stimulus-programme-is-a-boost-for-brazil-s-lv-market http://business.gov.in/investment_incentives/automotive.php http://business.gov.in/outerwin.php?id=http://dhi.nic.in/ http://www.ft.com/cms/s/0/c2e906a8-1f92-11e2-841c-00144feabdc0.html#ixzz2CDmIsPrF http://business.gov.in/taxation/types_customsduties.php http://business.gov.in/taxation/custom_duty.php http://www.icegate.gov.in/Webappl/desc_detail.jsp http://www.icegate.gov.in/Webappl/duty_details.jsp?cth=87032391&cntrycd= http://www.eximkey.com/contents/showpage1.asp?pageid=17029 http://www.cbec.gov.in/cae1-english.htm http://thebrazilbusiness.com/import-tax-guide/motor-cars-motor-vehicles-principally-designed-for-transport/sp/87032100-1 http://www.brasilglobalnet.gov.br/ARQUIVOS/Publicacoes/Manuais/PUBCEXBrasilI.pdf http://export.gov/brazil/static/CCG%202011%20-%20Chapter%205%20-%20Trade%20Regulations%20and%20Standards_Latest_eg_br_034997.pdf http://www.rosalienebacchus.com/articles/UnderstandingBrazilsTaxesOnImports_031210.html http://www.braanz.com/Sample-Import-Tax-Analysis.pdf http://www.eximguru.com/indian-customs-duty/SearchResults.aspx?AllKeywords=cars http://globaledge.msu.edu/Industries/Business-Services/Regulatory-Agencies http://globaledge.msu.edu/Knowledge-Tools/MPI http://globaledge.msu.edu/Blog/post/1070/India%E2%80%99s-Growth-Flounders-as-Corruption-Concerns-Increase http://globaledge.msu.edu/Blog/post/757/India-s-Business-Bottleneck- http://globaledge.msu.edu/countries/Brazil http://globaledge.msu.edu/Blog/post/1359/Is-Brazil-Overvaluing-Itself- http://globaledge.msu.edu/Trade-Blocs/Mercosur http://umtri.umich.edu/content/Marcos.Amatucci1.ESPM.Brazil.2012.pdf http://globalautomotiveindustrynews.com/Brazil-Automotive/ http://www.automotiveworld.com/comment/95781-stimulus-programme-is-a-boost-for-brazil-s-lv-market/ http://www.trade.gov/mas/manufacturing/oaai/build/groups/public/@tg_oaai/documents/webcontent/tg_oaai_003657.pdf http://www.ukti.gov.uk/export/countries/americas/southamerica/brazil/premiumcontent/387880.html http://ezinearticles.com/?How-to-Import-a-Car-Into-India&id=4796646 http://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx?Language=E&Country=BR,IN http://business.gov.in/investment_incentives/automotive.php http://www.ft.com/cms/s/0/c2e906a8-1f92-11e2-841c-00144feabdc0.html
Industry Forecast Scenario' 2012, Brazil Autos Report, 2, pp. 21-26, Business SourceComplete, EBSCOhost. [Accessed 15 November 2012].
Muller, J 2012, 'Going South', Forbes, 190, 7, pp. 46-48, Business Source Complete, EBSCOhost.
[Accessed 15 November 2012]
Roland Berger Strategy Consultants 2012 http://www.rolandberger.co.uk/expertise/publications/2011-09-20-Is_Brazil_a_car_paradise.html[Accessed 15 November 2012].

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