The budget 2018 might have skimmed over a large part of what the Automobile industry had initially expected, but it did leave in its wake additional cess’ that would affect any motorcycle or car that uses imported parts. The new custom duties for 2018, that went into place as of yesterday with a notice from the Minister of Finance to Customs, would see the duty for Completely Knocked down engine par to go from 10-15 percent and Completely built engines will go from 20-25 per cent. While proposing the budget the government had said that this was to push industries to make more parts locally. Interestingly the duties on Completely built up or CBU units will go down from 75% to 50% for bikes above 800cc, while CBU bikes below 800cc will see a drop from 60% to 50%. Which means that bikes that are being fully imported like Aprillia Superbikes, BMW Motorrad and Indian Motorcycles, will get cheaper. While bikes that are assembled in India will get more expensive.
Brands like Triumph Motorcycles and Harley Davidson motorcycles, who have working hard to increase localisation while assembling the bikes in India will face the brunt of it, considering that they will have to pay a premium for not only imported parts but also their CBU engine units. While brands like Aprilia Yamaha, BMW Motorrad and Moto Guzzi will get a benefit despite having no assembly infrastructure in India.Speaking on the duty roll out, Mr. Vimal Sumbly M.D Triumph Motorcycles India said- “ After the budget, this is a great initiative to cut import duties on CBUs, but for CKDs where local assembly is done in India, the import duties are increased by 5% and the FTA remains unchanged. We would urge the government to relook into this area.”
Now, Automakers will be looking to the government for some reform on this bill which seems unfair on those struggling to make in India. It is unlikely however, that the government will announce any reform for the same. Which means that brands like Triumph Motorcycles, Harley-Davidson Suzuki, Kawasaki and Honda are likely to see rise in prices for some models. While brands like Aprilia, BMW Motorrad, Yamaha, Moto Guzzi, Indian Motorcycles and MV Agusta are likely to get cheaper.