South Africa is reportedly evaluating the possibility of imposing tariffs of up to 50 percent on vehicles imported from India and China. The move is under review by the Department of Trade, Industry and Competition as the country seeks to address concerns about increased vehicle imports affecting local car manufacturing.

According to a report in Bloomberg, an internal review aimed to identify ways to stem the influx of vehicles from these key export markets, which policymakers argued are eroding the competitiveness of the domestic industry. The Department is specifically examining amendments to the existing tariff schedule to align import taxes with World Trade Organization most-favoured-nation guidelines.

Ayabonga Cawe, commissioner of the International Trade Administration Commission, told lawmakers in Cape Town that for fully built passenger vehicles, the capped tariffs are 50 percent.

He added: “In the components, there is a leeway, depending on the source market, of 10 to 12 percent.” This suggests that parts and components may also be subject to revised duties depending on their origin.

India and China have emerged as the top two vehicle suppliers to South Africa, accounting for 53% and 22% of total vehicle imports by 2024, respectively, according to recent data. This considerable market share has led to increased scrutiny from South African industry players.

Imports from China increased by 368 percent over the past four years, while imports from India increased by 135 percent. The sharpest competition has been in the entry-level segment, where lower-priced imports are challenging domestic manufacturers’ margins.

As part of the review, the commerce department is expected to consult with the National Treasury about other possible tax instruments. Among the measures being discussed are the introduction of excise duty on new luxury cars and changes to the current system of credit relief certificates.

China, India and South Africa, all members of the BRICS group of nations, have previously focused on fostering closer trade ties.