India Raises Import Duty on Motorcycles to 75%
The government of India has laid out its budget for 2013-2014, increasing the import duty for large motorcycles. The news will impact several major manufacturers hoping to gain a stake in the world’s second largest motorcycle market.
India has become the hotspot for manufacturers but one of the biggest obstacles they face is the duty India levies on luxury goods. Under the new budget, those fees are even higher. Motorcycles with engines 800cc and larger face a 75% duty, up from the previous rate of 60%. Cars face an even larger duty with the new budget increasing the rate to 100% from 75%. The increased levy will result in significantly increased prices for Indian consumers.
The government hopes the increased levies will entice manufacturers to assemble their products in India. The levy impacts products imported as Completely Built Units (CBU) but not products imported as Complete Knock-Down (CKD) kits for final assembly in India.
Harley-Davidson assembles Softail motorcycles at its Indian assembly plant, while manufacturers such as Yamaha and Triumph are setting up assembly operations in India. Meanwhile, local manufacturers such as Hero MotoCorp, TVS, and Bajaj (and thus, KTM as well) will benefit from offering lower-priced products than their foreign competitors.