Foreign luxury car makers have expressed disappointment with the Union Budget presented by Arun Jaitley who increased customs duties both on completely-built up cars as well as completely knocked down kits. Industry executives were upset after the confusion that followed the implementation of the Goods and Services Tax (GST) and claimed the market had just stabilised.
Speaking to The Pioneer, Rahil Ansari of Audi India said that the Government would have garnered more taxes with increased volumes of luxury cars if cesses had stayed the same. Ronald Folger, Managing Director of Merceedes_Benz India pointed out, “The increase in the basic customs duty of auto parts, accessories and CKD components varying from 5% to 10%, clubbed with the new Social Welfare Surcharge at 10%, at a time when the auto industry is reviving, is unfortunate, and comes as a surprise. We believe it is going to impact the auto industry, the consumers and is also against the spirit of ‘Make in India’. The auto industry ended 2017 on a positive note, where it grew despite multiple policy disruptions in the previous year; but the customs duty hike is likely to reverse the growth trend.”
Sales of luxury cars in 2017 touched an all-time high of close to 50,000 units despite high import and customs duties as well as high cess on larger capacity cars. India is considered the next big frontier for luxury cars, but as one unnamed auto industry observer told this newspaper, “buying a luxury car is seen as a sin in India and like cigarettes and alcohol attracts a sin duty every few years, this does not take into consideration the potential revenue of the sector, it is increased sales that will lead to manufacturing of such vehicles in India, not taxing imports.”