Assembling half a dozen brands of two wheelers in Nepal

With the government providing discount facilities in excise duty, customs, etc., the number of domestic assembling industries is increasing now. Due to the said policy of the government, the attraction of industrialists and businessmen has increased in the assembly industry in the last decade. With the concession of the government, the industrialists say that the goods consumed in the country should be produced and value added in the country, and they have started assembling vehicles.

The assembly of two-wheeler vehicles of brands such as Bajaj, TVS, Yamaha, Suzuki, Hero, Honda, Royal Enfield and others in the market has already started. All these brands of vehicles are completely knocked down (CKD) ie parts are imported and assembled.

In the case of Nepal, the first two-wheeler vehicle to be assembled is Bajaj brand motorcycles. After the rapid increase in the sales of Pulsar bikes in the market, 'Hulas Autocraft' under Golcha Group's Hansraj Hulaschand & Company has started assembling. Although it was registered with the Department of Industry in October 2071, Golcha Group has stated that commercial production has started since 2075.

Shekhar Golchha, the owner of Hulas Autocraft, said that more than 1 billion has been invested in Autocraft, which was registered with an investment of 24 million rupees to assemble Bajaj motorcycles in the country. "The demand for two-wheeled vehicles has decreased now, so the production is also decreasing," he said, "even though we have the capacity to produce 300 motorcycles per day, only around 100 are being produced now."

Golchha explained that Bajaj started assembling two-wheeled vehicles for the first time saying that value addition should be done in the country. According to the company, more than 200 people are getting employment in Bajaj's assembly industry alone. Although Hulas Auto Craft was the first to assemble two-wheeled vehicles, 'Nepal Electric Vehicle Industry Company' was registered in the assembly industry in 2053.

Jagdamba Motors under the Shankar Group has been producing TVS brand motorcycles, scooters and three-wheeled tempos since the end of 2076. "Jagdamba Auto Group" industry was registered in November 2075 with an investment of 245 million rupees. Sahil Aggarwal, Managing Director of Shankar Group, said that commercial production was started only after 1 year of industry registration.

The industry at Simra in Bara has an annual production capacity of 100,000 units of two-wheelers (motorcycles and scooters) and 10,000 units of three-wheelers. Agarwal said that they are producing 25,000 motorcycles and scooters annually after the decrease in demand. Although it has an annual production capacity of 10,000 three-wheelers, it is producing only 500 units. Aggarwal said that the total cost of the company has reached 80 crores so far.

VG Automobiles under Vishal Group registered 'Global Automobiles' industry in February 2078 to assemble Suzuki motorcycles and scooters. Vishal Group has established a Suzuki assembly plant in Parsa's Vindhyavasini Rural Municipality with an investment of Rs 46.45 million. Suzuki has been in trial production since last February. The company has said that all models of Suzuki motorcycles and scooters will be produced in the country.

Morang Auto Works (MAW) Enterprises, the official distributor of Yamaha, has registered the industry in October 2078 for assembly. According to the Department of Industries, 'MAW Auto Pvt Ltd' industry has been registered with an investment of Rs 1.51 billion. According to the department, the company plans to produce 31,000 units of motorcycles and 19,000 units of scooters annually from the said plant. It is mentioned that 144 skilled manpower will be employed in this industry. Yamaha's FZ series, MT 15, R 15 are trendy models of motorcycles and there are also Fascino and Razr scooters. Recently, Himal Moto has established a Honda assembly plant in Bhairahawa with an investment of 1.5 billion rupees. It has the capacity to produce 1 lakh units of motorcycles and scooters annually. The assembly plants of Yamaha and Honda have been put into operation, but they have not been operating at full capacity.

CG Motor under Chowdhury Group has been appointed as the official dealer and is about to formally start selling Hero motorcycles and scooters in Nepal. CG Motor has started assembling four Hero models in Nepal. 100 and 110 cc Super Splendor, Expuls motorcycle and Zoom scooter are about to be assembled and put on sale. In August 2079, 'NGM Engineering and Sales' company was registered to assemble Hero Motorcycles with an investment of 33 crores.

Royal Enfield has started fully assembling motorcycles in Nepal since last May. The plant set up by Royal Enfield in Birganj in collaboration with the Triveni Group will be able to produce 20,000 units of motorcycles annually. The company said that the plant currently assembles medium-sized (250 cc-750 cc) motorcycles. Recently, the assembly plants of all the famous brands of vehicles have been established in Nepal. Some are operating at full capacity and some are at partial capacity. Some are in testing phase. But today, businessmen say that the overall demand for vehicles has decreased due to the sluggish economy. They say that the overall demand for two-wheelers has decreased by 70 percent. Businessmen say that the government has to do various things to keep the market running.

After the assembly plant was established in the first phase to create the overall ecosystem of the automobile industry, other industries have also started operating for its parts. Businessmen say that tires and batteries have started to be made in the country. Golcha, the owner of Hulas Autocraft, says that with the development of the assembly plant, other industries will gradually come into operation. "After the assembly plant comes into operation, the industries of parts required for vehicles will also come," he said. After the assembly plant, other parts industries come into operation. He argues that vehicles can be manufactured in the country soon after. Golchha says that if the government moves forward with long-term thinking along with a stable policy for the assembly industry, it will become an ecosystem for the automobile industry. He says that the value addition of the country will happen after assembly starts here. Businessmen say that the price of imported vehicles is 15/20,000 less compared to imported vehicles, and jobs are also being created. More than two thousand skilled manpower are directly and indirectly employed in the entire assembly industry.

Although the market is small, Sahil Agarwal said that Nepal has gradually moved forward from import to production as assembly plants of every brand operating in the country have come. "Most of the brands of the assembly industry have been registered in the country, a big revolution has taken place," he said, "the government should continue to encourage it." He said that it is difficult for the assembly industry to grow due to the small market.

When importing all types of assembled and unassembled vehicles, road construction duty is collected at the customs. Agarwal says that it will take 2 to 3 months to bring the unassembled goods to the customer and after going to the market, the road construction fee should be levied. He says that having to pay the road construction fee at the beginning will put a burden on the assessment. Businessmen say that although the automobile sector has contributed greatly to the country's economy, the government has not paid attention to increase its market. Since the past, the government has been giving discounts on the import of spare parts of vehicles imported for the assembly industry. A 25 percent discount will be given on the excise duty on import of unassembled two-wheelers and on the sale of ready-made vehicles produced by such industries. The government has mentioned in the budget of the current financial year that the provision of 50 percent discount on excise duty for 5 years after the start of production will be provided for installing assembly plants. It's been 5 years since Bajaj and TVS started commercial production .

In the Economic Act, 2078, there is a provision of 50% discount on the excise duty levied on the importation of unassembled two-wheeler and four-wheeler vehicles and the excise duty levied on the sale of ready-made vehicles produced by such industries. More than a dozen industries have been established to assemble electric and petroleum two-wheelers. However, not all industries are operational. Dhruv Thapa, the former president of NADA Automobiles Association of Nepal, says that the assembly industry has started gaining momentum recently. He said that since the government started providing more facilities from the previous financial year, the attraction in the assembly industry has increased. "From the last 5/7 years, 50 percent discount was started on excise duty, but still the assembly industry was not able to grow," he said. That's why the assembly industry started coming. If we look at the data of the customs department, there is only a slight difference in the number of vehicles brought for preparation and assembly. 44 thousand 427 units of unassembled bike and scooter spare parts have been imported between July and February of the current financial year. According to the data of the department, 37 thousand 283 units of ready-made scooters and bikes were imported.

In the last financial year, 69 thousand 444 units of ready-made bikes and scooters were imported, while 41 thousand 891 units of unassembled bikes and scooters were imported. Although assembly plants for all brands of vehicles have been established in the country, only some models are being assembled. That's why ready-made vehicles are imported more than unassembled ones. In the financial year 2078/79, 184 thousand 466 units of pre-made bikes and scooters were imported. During the same period, 1 lakh 4 thousand 34 units of unassembled bikes and scooters were imported, the department said. In the financial year 2077/78, 3 lakh 55 thousand 580 units of bikes and scooters were imported, only 311 units of unassembled bikes and scooters were imported.

Due to the fact that the government has given discount facilities, even though the investment in the assembly industry has started to increase, consumers are complaining that they are not getting the benefits. The 58th report of the Auditor General has already raised questions saying that the company selling vehicles has taken the government discount facility and assembled them in the country, but the economy and the consumers are not getting the benefits. "Regarding Bajaj's completely knocked down (CKD) motorcycles, it appears that 767 million 47 thousand revenue rebates were taken during customs clearance when importing 5 billion 28 billion 25 lakh 8 thousand," the report said, "even the price equal to the revenue rebate given by the government In the absence of accretion, it was found that the benefit of revenue exemption was received only by importers. It does not seem to have contributed to the economy and consumers.

Businessmen say that if the government had not given the discount, the price of the vehicles being sold and distributed in the market would have increased by 10 percent. They say that the vehicle available in the market will cost an additional 20 to 25 thousand rupees more than the current price. Golchha, the owner of Hulas Autocraft, said that if the government did not give a discount, vehicles would be more expensive. He says that the assembly industry is adding value and also providing employment. "Vehicles are being sold at this price because the government has given a discount," he said.