Luxury cars to get costlier with hike in custom duty on CKD imports

Luxury cars l9ike Audi and Mercedes are likely get costlier by around Rs10 lakh after the government yesterday hiked the custom duty on CKD (completely knocked down) imports coupled with the levy of social welfare surcharge on imported goods.

In the Budget for 2018-19, finance minister Arun Jaitley hiked custom duty on CKD (completely knocked down) imports of motor vehicles, motor cars, motor cycles from 10 per cent to 15 per cent.

Additionally, the government has levied a Social Welfare Surcharge on imported goods at 10 per cent of aggregate custom duties.

In view of the new taxes, German luxury carmaker Audi said that prices of models, ranging from A3 to R8, are expected to go up between Rs1.5 lakh and Rs10 lakh.

''For the luxury auto sector, the Union Budget 2018-19 is disappointing and is against the spirit of partnership,'' PTI  quoted Audi India head Rahil Ansari.

He added that the hike in custom duty and introduction of Social Welfare Surcharge in lieu of an Education Cess, would definitely affect the prices again, which will further confuse the customer, he added.

''The market sentiment had only recently become stable after the introduction of GST Cess. The budget clearly lacks a focus towards the luxury auto industry, which otherwise would have given us a better clarity to plan our strategy for the India market for short and long term,'' Ansari said.

Roland Folger, managing director and CEO, Mercedes-Benz India said the increase in the basic customs duty of auto parts, accessories and CKD components at a time when the auto industry is reviving, is unfortunate and surprising.

''We believe it is going to impact the auto industry, the consumers and is also against the spirit of 'Make in India' he told  Business Standard. The auto industry ended 2017 on a positive note, where it grew despite multiple policy disruptions in the previous year; but the customs duty hike is likely to reverse the growth trend. The automobile industry is already subjected to one of the highest rate of taxes under the GST regime,'' said Folger.