Budget Disappoints Luxury Car Makers

Budget Disappoints Luxury Car Makers

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In a strive to push the Centre’s Make in India initiative, Budget 2018-19 presented by Finance Minister Arun Jaitley has proposed raising the custom duty on luxury vehicles that are not fully made in India but built using kits manufactured outside the country for subsequent assembly here.

As a result, those vehicles which are imported into the country through kits for assembling here will get costlier as the custom duty on them has gone up to 15 percent from the existing 10 percent. This would impact luxury car and bike manufacturing companies such as Mercedes-Benz, BMW, Audi, Volvo, Jaguar Land Rover, Harley-Davidson and Triumph, who have set up assembly plants. Prices of the cars assembled in India will see a price revision by a minimum of ₹80,000 on vehicles costing around ₹25 lakh. Assembly facilities in India produce cars which cost as much as ₹1.5 crore. However, the customs duty on fully imported cars, SUV and bikes has been left untouched.

When contacted, the Society of Indian Automobile Manufactures (SIAM) Deputy Director General Sugato Sen said that the move to increase the duty on components would impact the entire automobile industry.

“Since every company has to import some kind of components, the increase is going to impact everyone. Companies with greater exposure to imported articles would be impacted more,” Sen said.