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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 85] NEW DELHI, WEDNESDAY, APRIL 19, 1972 CHAITRA 30, 1894

Separate pnging is Given to this Part in order that it may be filed as a separate compilation

MINISTRY OF INDUSTRIAL DEVELOPMENT

RESOLUTION

New Delhi, the 19th April, 1972.

No. 1 (79)/69-A.E. Ind. (I).—The Tariff Commission submitted in January, 1970 its Report on the Fixation of Fair Selling Prices of Automobiles—Standard .Herald Passenger Car—Four Door Model, on the basis of an inquiry undertaken by it under Section 12(d) of the Tariff' Commission Act, 1951 (50 of 1951). Its recommendations are stated below:—

(i) The fair ex-works price of Standard Herald 4-door model passenger car has been estimated at Rs. 13,762, exclusive of dealers' margin, excise or other duties and taxes. This figure has been based on the produc- tion of 3,500 passenger cars and 1,500 commercial vehicles II for any reason these production levels are not attained, and there are substantial shortfalls, the estimate of cost will need modification.

(ii) A comparative study of the prices of Standard Herald manufactured in India with those of the Standard Triumph 1200 indicates that the basic ex-factory cost without taxes for the Indian model of the same size but with a less powerful engine is higher. On a broad estima- tion, the difference seems to be of the order of 38 per cent. Indigeni- sation small volume of production and built-in tax element. e among the contributory factors for the higher price of the Indian model.

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(iii) On the subject of C.K.D. deletions and their Indigenous replacement, cost, it is observed that broadly speaking the cost of self-manufactur- ed items is decidedly lower than those of indigenous bought-out com- ponents.

(ivj As there is no ground to assume that the cost ol production of ancillary manufacture ;s arc not similar to those of automobile manufacturers themselves, there is need to ensure that ancillary manufacturers, who- contribute almost half of the final ex-factory cost of the vehicle, maintain their prices at a reasonable level.

(v) Standard Motor Products apparently exercises due care in obtaining its supplies from ancillary manufacturers who offer the most compe- titive rates; even with regard to relatively small volume of purchases, from its subsidiaries or collaterals, there Is no evidence that high, rates are accepted without scrutiny.

(vl) In order to neutralise a part of the cost disadvantage Standard Motor Products suffers, Government may consider, as a short term measure,, allotment of steel to this unit entirely from the cheaper (Indigenous) sources,

(vil) In the long run, however, one obvious method of lowering the cost of Standard Motor Products would be to create conditions enabling it' to add substantially to its estimated volume of production without proportionate augmentation of plant capacity or the labour force. It Is our belief that such a step is likely to make the unit more economi- cally viable and lead to cost reduction and thus to compete efficien- cy. Having regard to the large overall backlog of registered buyers- and the steadily growing demand for motor cars in a developing, economy and with the assurance of a reasonable margin of return* it is expected that Standard Motor Products will be able to market the-- additional volume of production.

(vlli) As result of Indlgenisatlon generally at a higher cost, the collaboratora- stand to gain Incidentally by way of Royalty on the cost difference¹ between the C.K.D, value In rupees of the components replaced andr the corresponding replacement cost of Indian components. To the consumer, this amounts to a double disadvantage.

(ix) In the context of the current discussions on the small car project it i"- consldered that a specific techno-economic survey somewhat on the lines of the British model, jointly with the industry and automobile- engineering experts in India might be useful. Such a comprehensive investigation In the light of the progress made by the automobile- industry In the other countries of the world would enable Govern- ment and the Industry to devise concrete measures to rectify the- Imbalance resulting from uneconomic working of the existing unlts..

1970 that a Commission bo appointed for the purpose of recommending the fair selling prices of all the three makes of passenger cars manufactured in the country. In pursuance of the recommendation of the Supreme Court, Government appointed the Car Prices Inquiry Commission under the Chairmanship of Shrl Sarjoo Prasad Singh, Ex-judge of the Patna High Court, on the 27th May, 1970. After the report of the Commission was received, the Supreme Court resumed hearing of the pending Writ Petitions on the 16th April, 1971 and directed that with immediate effect and as interim measure tile manufacturers be permitted to sell their cars at prices recommended by the Commission pending final disposal of the case and subject to such adjustments as may be found necessary in the light of Court Judgment later. Accordingly, the ex-factory retail selling price of Standard Herald Four-Door Model Car was fixed at Rs¹. 16,080 on 16th April, 1971. The hearing of the pending writ petitions of the car manufacturers, was resumed by the Supreme Court on the 6th October, 1971 and, after taking into account the submission made by the car manufacturers, the Government of India and other affected parties, the Court delivered its final judgment on the 24th! November, 1071 laying down the principles on which the future selling prices, of the three makes of cars manufactured in the country should be worked out' and notified by Government. The selling prices of the three makes of cars have been revised in the light of the judgment of the Supreme Court and notified, on 24th January, 1972. In view of these developments, Government have decided not to take any action on the Report of the Tariff Commission on "Fair Selling Prices of Automobiles—Standard Herald Passenger Car—4-door model" submitted, by the Commission In January, 1970.

ORDER

Ordered that a copy of the resolution be published in the Gazette of India, and a copy thereof communicated to all concerned.

S. M. GHOSH, Jt. Secy,