Budget 2018 Impact on Motorcycle Industry: CKD route will now attract more taxes as custom duty on these imports has been raised from 10% to 15%. The variable custom duty on motorcycle accessories will also be charged at 15% per unit. This was earlier charged between 7.5% to 10%.
In other words, buyers will now have to pay more for knocked down imports and accessory prices have gone slightly up after Budget 2018. Manufacturers import kits from certain countries and assemble them here for reduction in prices due to different tax slabs. This will affect certain brands like Kawasaki, Honda, Triumph and Benelli more than others.
Majority of their products are locally assembled and priced competitively against brands like Ducati. The budget’s primary focus was on building strong economy through rural empowerment and focus on agriculture segment. Still, those segments also have imports in the form of CKDs and thus, indirectly cost also rises in other segments.
India is driving fast into the superbike direction as every passing month has proven better sales than the last one due to practical pricing. Government should have focused on lowering indirect taxes as more sale will actually result in better revenue in terms of road tax, insurance and other everyday expenses.
CBU route is the most expensive way to bring a motorcycle into India. That results in almost double the price tag and therefore, doubles the amount of road tax applicable on the product. On the other hand, hike in custom duties may push some manufacturers into local production, that results in better economy growth through job opportunities.
If government plans to brings these things first, they should encourage brands to lease production facilities for a subsidized amount for initial months. That could help them set local production hubs like Bajaj Auto did for KTM and TVS for BMW.
