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It will soon become difficult to own a Luxury Vehicle in India

The Union Budget 2018 presented by the Finance Minister, Shree Arun Jaitley, gave a major jolt to the Luxury car and bike manufacturers. The Luxury car prices of automakers like BMW, Mercedes Benz, Audi, etc. are set to go up by at least Rs 1.25 lakh to Rs 5 lakh whereas the luxury bike prices of manufacturers like Harley Davidson, Triumph, etc. are set to go up by somewhere Rs 15,000 to Rs 50,000.

The Finance Minister has taken this step in order to further boost the ‘Make in India’ programme of the Government so that the Indian manufacturing and components can get a huge benefit from the programme. This is indeed a good step in the direction as most of the luxury bikes and cars are currently being assembled from their knocked down forms in India.

The basic custom duty tax on these completely knocked down imports of cars, bikes and motor vehicles has been increased by 5-7.5% which comes to an increase from 10% to 15% in case of luxury cars and bikes. In case of luxury buses, they are assembled from Completely Built Units (CBUs) and were pegged with a custom duty of 20% which has been again increased to 25%.

The Finance Minister mentioned in his speech that there is a huge scope for value addition in certain sectors, like food processing, electronics, auto components, footwear and furniture. So, in order to further boost up the ‘Make in India’ initiative of the Government, the custom duties have been increased for luxury vehicle manufacturers in order to attract local manufacturing under the Make in India programme.

Additionally, the finance minister has also increased duty on radial tires used in buses and lorries by 5% which will again support ‘Make in India’ initiative and encourage local manufacturing of tires, which will aid radialisation of commercial vehicles.

Many industry experts have commented on this move saying that it is a great step by the Finance Ministry which will aid in the localization of major components which are currently being imported as the custom duty on major components like engine and transmission parts, brakes and parts thereof, suspension and parts like, gear boxes, airbags etc. have been increased from 7.5/10% to 15%. Now let's just wait and watch that how this fares for the 'Make in India' initiative of the Government!