Currently, India has a large number of luxury automobile manufacturers, with the majority bringing either imported or CKD units. None of the luxury automobiles are manufactured in India. Due to import fees and other levies, these vehicles are exceedingly expensive to purchase. But there is some good news for you all! According to a recent report, the Government of India plans to slash import charges from 110% to 10%, significantly lowering the cost of these premium vehicles. Let’s look at the new luxury vehicle import policy.
Luxury Car Import Policy: India To Reduce Import Duty
The European Union wants the Indian government to decrease or eliminate automobile import duties as part of a prospective trade agreement. According to insiders, the government may consider lowering import charges to finalize the deal with the EU. The European Union has demanded that the Indian government decrease import taxes from 110% to merely 10%. Currently, European automobile manufacturers such as Skoda, VW, and other German luxury brands such as Mercedes provide their vehicles via CKD or CBU methods.
Under this scenario, the current import duty makes their vehicles prohibitively expensive for Indian consumers. So, with import duties reduced to just 10%, such firms will be able to offer cars at more competitive pricing. For example, the Land Rover Defender is brought through the CBU channel at a price of Rs 1.24 crore. In the United States, the Defender 110 costs $60,800, or around Rs 52.31 lakh. If import duty is cut to just 10%, the Defender 110 would cost between Rs 60 lakh and Rs 65 lakh (on-road, Mumbai).
Indian Carmakers oppose
However, some local automakers are unhappy with the European Union’s suggestion. They want the government to maintain the tax at a minimum of 30%, even if it is cut. They also request that present import taxes be maintained for at least four years to allow Indian enterprises to flourish and compete with global names.
Luxury Car Import Policy: What Happens If Import Duties Are Reduced or Eliminated in India?
If India cuts import duties, several multinational corporations will seek to enter the country. This will have an impact on Indian carmakers, who are still developing new technology. Indian automakers will also face losses because international brands would compete directly with them at a same price range. We will witness cars such as Volkswagens, BMWs, Audis, and Mercedes. These are all European vehicles that will be sold at significantly reduced prices than they are today.
Indian automakers are still working on technologically advanced vehicles. The money and time that these firms have invested in creating innovative technology will be wasted if EU brands take over the market. The story does not specify whether the deal is for EVs or petrol/diesel cars. We may expect numerous luxury cars to become far less expensive.