The Customs Duty on completely built units was recently slashed by up to 25% by the Indian Government.
The Indian premium two-wheeler industry has been growing constantly since the year 2002. New major players have been introducing their latest and greatest models in the nation with some even investing in India. The Indian government recently hiked the duty on CKD (completely knocked-down units) by 5 percent. This seemed unusual as the bikes imported from Thailand under the Free Trade Agreement saw no change in tax rate. Mere weeks later, the Indian Government sheepishly decided to reduce the customs duty on CBU (completely built unit) as well. The duty levied on under 800cc bikes was 60% and over 800cc was 75% both of which has been reduced down to 50%. These changes in the tax structure have left the automakers in a rather confused state as such policy changes affect their future plans by a huge margin. Want to know who benefits the most from these tax alterations, read along.
2018 Import Duty Cut – Introduction
Import duties are to be paid on anything that is imported to the nation for the purpose of sale. The Indian government has held high import duty on CBU models as they wanted to promote local assembling and manufacturing as it provides more job opportunities. Another reason for high import duty on completely built units is to safeguard the local manufacturers. As a result of such high import fees, several automakers like Harley Davidson and Triumph setup their local assembling plants in India and most of their lineup are brought in as CKD units. But with the government hiking the CKD duty by 5% means they clearly want to promote local manufacturing instead of just assembling. The steep decrease in the customs duty on CBU bikes is a welcome move as enthusiasts will have to pay less for their respective bikes now. The performance motorcycle industry in India is still not big enough for the automakers to set up their plants and start local assembly of their vehicles. While Harley and Triumph did make these investments, the hike in CKD import fee has left them in the dark.
2018 Import Duty Cut – Who gains?
All the brands that import their performance bikes via the CBU route should benefit from this discount in import duty. Aprillia, BMW Motorrad, Yamaha, MV Agusta, Indian Motorcycle and Moto Guzzi are all set to benefit from the tax revision. Will the benefits actually reach the consumers, only time will tell as none of the automakers has released their updated price lists yet.
2018 Import Duty Cut – Who fears loss?
The brands negatively affected by the government’s revised tax rates would be Triumph Motorcycles and Harley Davidson. The British two-wheeler brand announced last year its plan to locally assemble 90% of its portfolio. The increase in CKD tax and decrease in CBU resulted as a double blow for both the automakers as they’ve invested a lot in India and were hoping for exactly opposite to what actually happened. Commenting on the revision of customs duty, Triumph Motorcycles India MD, Vimal Sumbly commented “After the budget, this is a great initiative to cut import duties on CBUs, but for CKDs where the local assembly is done in India, the import duties are increased by 5 percent and the FTA remains unchanged. We would urge the government to relook into this area.” Benelli also assembles its bikes in India and the tax revision is equally disheartening for the automaker.
2018 Import Duty Cut – Japanese Automakers
All the Japanese automakers selling their performance bikes in India offer a mix of CKD and CBU models. Taking Honda as an example, the CBR650F and the Africa Twin being CKD will witness an increase in price while the Goldwing being CBU will be available at a discounted price. Whether the future models from these automakers will be CKD or CBU, we’ll know in a short time as the companies will reveal their future plans accordingly.