Luxury Cars to Get Cheaper by year 2017

Good news for luxury cars buyers, by 2017 import duty on luxury cars imported from European countries, Japan and South Korea could be cut down by up to 30 per cent, if the proposed FTAs (Free Trade Agreements) with these nations approved. In the coming future, the government is expected to cut down custom duty on vehicles imported from EU countries, which includes Germany, as well as Japan and South Korea, nations with whom the Indian government has free trade agreements (FTAs). By the 2017, European countries has offered to lower import duty to 30 per cent on cars under the proposed FTA with the EU. The other two Japanese and South Korean automakers are also expected to avail same benefits after sometime, although the final approval on the same is still under covers.

As per the current law, the cars priced more than Rs. 22 lakh needs to pay 100% custom duty, and those priced under Rs. 22 lakh pays 60% import duty.  Talking about EU, their is also a chance that allows the import of at least 2.5 lakh cars at 10% duty between 2017 and 2021. Anything above these numbers will be imported by paying 30 per cent custom duty. If government reduces import duty by 30%, then the total duty measure would fall around 80% from current 174%. After such a decision, the car which cost Rs. 25 lakh, after import priced at Rs. 69 lakh will come for Rs. 45 lakh. 

However, the SIAM (Society of Indian Automobile Industry) opposes the Indo-EU FTAs, saying that it will have long effects on the Indian auto industry. Industry experts want imports to be limited largely to the luxury segment. According to SIAM, it will reduce the opportunity of local production or in simple it will effect the foreign investments. Despite the common duty tariff plans, Korean and Japanese carmakers may not gain as much as European carmakers, as they mainly targets the mid-market of India. Honda, has recently started assembling its flagship SUV CR-V, which was earlier imported.

According to the Pavan Shetty, Lamborghini India head, "It will surely expand the market, by at least double. By 2017, the per capita income as well as the domestic economy will expand from the current levels, and the infrastructure will also be better. The timing of the duty reduction will thus be perfect to give a fillip to sales," he said. Meanwhile, the Indian government denied to change the current tax slab and ask to examine the Indo-EU FTA.

The Japanese carmakers also want India to offer same concessions to them, which they offered EU, as well under the Indo-Japan FTA. Auto-giants such as Honda, Toyota, Nissan and Maruti Suzuki, which covers more than 50 per cent of the Indian auto market, are disturbed by the Indian government's proposal to cut down custom duties on luxury cars under the Indo-EU FTA.

Source: Zigwheels