Import duties on bikes revised, CBUs to cost less

Rachit.K.Dogra · 14th February 2018, 23:30

So, If I have understood it correctly:
After promoting CKD for the last 2-3 years and penalizing, in essence the CBU by having higher taxes on CBU, we have now gone in the opposite direction?

I am sorry, I am a bit confused. So we are increasing the Import Duty on CKDs, and trying to convert them to Make in India? And reducing the CBU duties?

Its a bit counter intuitive to what we have been hearing since last 2-3 years. Not that I am complaining, but I just think this will be reversed very soon.

Rachit

CrAzY dRiVeR · 14th February 2018, 23:45

Quote:

Originally Posted by Rachit.K.Dogra

So, If I have understood it correctly:
After promoting CKD for the last 2-3 years and penalizing, in essence the CBU by having higher taxes on CBU, we have now gone in the opposite direction?

I am sorry, I am a bit confused. So we are increasing the Import Duty on CKDs, and trying to convert them to Make in India? And reducing the CBU duties?

Same initial impressions from me - as this is contradicting the 'Make in India' movement. But...

After readings all the related articles today regarding Trump's response - it is pretty clear that - a) The move was due to US pressure on the Indian Government and b) That the PM had called and informed Trump regarding this import tax reduction and c) Obviously - US is not happy about the reduction to 50% either. Because they have a free tax structure for motorcycles being imported from India to US (I'm guessing he is referring to Royal Enfield and KTM).

They expect India to have 0% taxes for US imported motorcycles, or they would place a 50% import tax on vehicles imported from India.

Remains to be seen whether - a) Indian Government will ignore this aggression from US (Unlikely) b) Reduce CBU taxes to 30% or so to make it only marginally more than SKD or c) Only grant free trade for US imports (like we 30% for CBU imports from Thailand) so as to appease US and still keep some control on the imports.

Personally - I feel that option 3 is likely to happen. The prime beneficiary of this deal could be Harley Davidson as the motorcycles and spares cost could come down.

Turbanator · 15th February 2018, 07:42

Quote:

After readings all the related articles today regarding Trump's response - it is pretty clear that

Yes, this indeed looks to be correct, wish Trump becomes Chancellor of Germany and he can tell these guys to do same on cars

But I cannot think of anyone else apart from Harley, exporting bikes from India to the US, so maybe they can simply give input credit of customs to extent of exports to Harley India and come out of this situation. The numbers maybe peanuts for everyone but Trump sounds correct.

Also, if someone can tweet President to think about Ford/ Jeep as well, Mustang or a Wrangler without duties @ 30 lacs sounds yummy

http://epaper.tribuneindia.com/15444...2018#page/12/2

CrAzY dRiVeR · 15th February 2018, 10:15

Quote:

Originally Posted by Turbanator

But I cannot think of anyone else apart from Harley, exporting bikes from India to the US, so maybe they can simply give input credit of customs to extent of exports to Harley India and come out of this situation.

KTM 390s sold in the USA are made in India by Bajaj.
Royal Enfields are sold in the USA, though it is into a niche market there.
BMW 310s sold in the USA are made in India by TVS.

Harley Davidson doesn't really export to USA as far as I know. Street 500 and 750 is manufactured in three plants - US, Brazil and India. And Indian plant caters to India, Portugal, Italy and Spain.

theredliner · 15th February 2018, 11:07

Uncle Trump comes to the rescue of heavily burdened Indian bikers

I'm all for local production, but given the paltry sales numbers, the manufacturers wouldn't have bothered with local production any time soon. The only party who benefits with high import duty in case of superbikes is the government.

CKD doesn't do much good either. It may add only a handful of jobs while having no positive impact on the component supplier industries as all the components are imported anyways.

The way forward would be to increase the sales of superbikes through reduced duties(it will take quite a while). Once the numbers build up, the manufacturers will have a reason to come up with local production.

ani_meher · 15th February 2018, 12:04

Developing countries will always try to limit imports by heavily taxing them. Otherwise highly efficient products from developed countries will wipe out the local competition.

So I don't think a complete reciprocal taxation is a possibility. Reduction in import taxes is a welcome move, but may be opposed by local players if it drops below comfortable limits.

CrAzY dRiVeR · 15th February 2018, 12:06

Quote:

Originally Posted by ani_meher

Otherwise highly efficient products from developed countries will wipe out the local competition.

So I don't think a complete reciprocal taxation is a possibility.

Above 800cc? Which brand looks likely to build one locally?

CBU imports below 800cc are not allowed anyways I think.

riteshritesh · 15th February 2018, 14:12

Sorry for being OT here,but this is what I always feared by " the make in India" initiative and higher Import duties to "force " the make in India.
While the initiative is great, the means to make it happen is flawed. By imposing a higher Import tariff ( which itself is against the WTO mandate), hypothetically, even if the Government achieves its targeted intentions, what will happen if the importing country of India goods imposes a higher tariff on Indian made goods. We will end up with unsold inventories and a huge pile of mess.
Trump is threatening ( and rightly so) for motorcycles. Soon it will happen for the Mobile Industry.
I wonder what exactly are the intentions in raising import duties on many items this budget, rather than decreasing every year as per WTO norms.

dextor · 15th February 2018, 14:59

It looks like a balancing act. Reduce tax on CBU & cover up the loss by increasing tax on CKDs. Our FM & team thinks like a baniya (business man). See the effect of GST on lease vehicles.

And all this due to pressure from US. I never understood the rationale behind having heavy taxes on high performance bikes/cars because no one in India is manufacturing them. So they are no way cannibalizing Indian market.
Moreover seeing the demand of such products, even Indian manufacturers might start improving their lineups which will also help in better exports.
In India having any premium/niche product is considered luxury & luxury in poor country is always penalized through heavy taxation.

udainxs · 15th February 2018, 16:33

Quote:

Originally Posted by CrAzY dRiVeR

Even the others have the higher end models under CBU where the numbers wont justify CKD.

Most Triumph models, Kawasaki models specially above Ninja 1000, Suzuki models other than Hayabusa, most high end Harley Davidsons etc were CBU.

Kawasaki bikes are imported from Thailand, which is covered under the Free Trade Agreement. The duties were anyway lower in this case and we probably wont see a reduction in price.

I believe Ducati is also importing from Thailand only, apart from the Monster 1200 which comes from Italy

Vishnuk · 15th February 2018, 16:42

Quote:

Originally Posted by CrAzY dRiVeR

Thanks for pointing it out. Looks like the FTA with Thailand caps the import duty at 30% as against 75% earlier (and 50% now).

Not able to get any document on this, but duty on bikes above 800cc imported from Thailand was pretty low from 2009 and is supposed to be "zero" from 2014 onwards.

Quote:

Originally Posted by CrAzY dRiVeR

CBU imports below 800cc are not allowed anyways I think.

There is no restriction per say, on import of bikes less than 800cc, but the condition is that they have to be homologated by ARAI and have to meet all the standards of the motor vehicles act. Whereas bikes above 800cc don't need to go through the Homologation process.

That is the reason you will find bikes like Street 750, Ninja 650 which are assembled as CKD & homologated with front number plate, saree gaurd etc but won't find it in bikes above 800cc from the same manufacturer. So if a manufacturer can get the homologation completed and ship the motorcycle as CBU with front number plate, saree gaurd etc

I don't think it will be restricted.

Both of these statements, is based on what I heard from someone in the industry a while back.

Turbanator · 15th February 2018, 16:45

Got this forward from Triumph- Chandigarh group sums up the benefits

Who are the gainers?

The brands that are likely to benefit from the reduction in customs duties include Aprilia, BMW Motorrad, Yamaha, MV Agusta, Indian Motorcycle and Moto Guzzi. As these brands bring their motorcycles via the CBU route, we can expect their products to be much more affordable. However, manufacturers are still working out the impact of the reduction of duties and will be sharing a revised price list soon.

Half-happy

There are some brands whose portfolio consists of both CKD motorcycles and CBU offerings, so the impact of the new change in policy will be a bit mixed. Kawasaki is the biggest player in this segment as its liter-class and above offerings will be cheaper (barring the Ninja 1000). However, the hike in CKD duties will affect prices of the Kawasaki Z250, Ninja 300, Z650, Ninja 650, Vulcan S, Versys 650 and Versys-X 300. Prices for the Honda CBR1000RR Fireblade and the Gold Wing will witness a drop while that of the CBR650F and the Africa Twin will increase as they are CKDs. Suzuki only assembles the Hayabusa currently in India, but, it has plans to locally assemble the upcoming GSX-S750 and maybe also bring in the V-Strom 650 via the CKD route. Given the drop in customs duties for CBUs, it will be interesting to see what strategy the Japanese two-wheeler giant adopts.

Unhappy

One brand that has been particularly affected by the change in government policy is Triumph Motorcycles. The British brand had announced last year that it wanted to locally assemble 90 percent of its products in India. The increase in CKD and the drop in CBU prices has dealt a double blow for Triumph. Commenting on the revision of customs duty, Triumph Motorcycles India MD Vimal Sumbly said, “After the budget, this is a great initiative to cut import duties on CBUs, but for CKDs where the local assembly is done in India, the import duties are increased by 5 percent and the FTA remains unchanged. We would urge the government to relook into this area.” Harley-Davidson will also be very unhappy, as will Benelli.

Unaffected

The only brand that hasn’t been completely affected by the revision in CKD and CBU prices is Ducati. The Italian two-wheeler giant almost entirely imports its offerings from Thailand. Since India and Thailand have an FTA (Free Trade Agreement), import duties are significantly less despite the bikes being brought in via the CBU route. The only products in Ducati’s current portfolio that are imported from Italy are the Monster 1200 and the Panigale R Final Edition, prices for which will witness a reduction. Even the new Panigale V4 will be coming from Thailand, hence the competitive pricing.

NiInJa · 15th February 2018, 17:10

Quote:

Originally Posted by CrAzY dRiVeR

Above 800cc? Which brand looks likely to build one locally?

As an example, take Yamaha R3 and TVS Apache RR310, both come under 300 cc category. Few years ago before RR310 came in, if the imported Yamaha R3 was priced almost the same as a locally made product, no one would want to buy RR310 today (at least I would not till I am sure it is a good product and has gained popularity and trust), these government measures implicitly demands Indian manufacturer improve in terms of quality, buyers to buy local products to instill trust in locally manufactured goods. The ones who have money will buy the best any way, though I agree that taxes should not be exorbitant on imported goods and that should be discussed.

India is warming up to the idea manufacturing and selling 400 cc bikes now, in the next few years may be take it to 600 cc and bring the quality at par with internationally made bikes. When that happens, I think that would be the right time to bring import taxes to comparable levels. So in that way, I feel that they should reduce taxes on sub 400cc segment of bikes.

tharunkar · 15th February 2018, 18:38

Is the Kawasaki Z900 going to be priced lower after this move? My friend has booked the Z900 and it is in transit and to be delivered in a week. I am wondering if there is a price cut , will we still gain since the bike has already been imported and on the way to us.

ani_meher · 15th February 2018, 19:55

^^^ I think it's better to wait and watch, if possible. It may result in significant savings, or worst it will cost the same after a month or two.

14th February 2018, 23:30	#16
Rachit.K.Dogra BHPian Join Date: Sep 2010 Location: Gurgaon Posts: 990 Thanked: 1,806 Times	Re: Import duties on bikes revised, CBUs to cost less So, If I have understood it correctly: After promoting CKD for the last 2-3 years and penalizing, in essence the CBU by having higher taxes on CBU, we have now gone in the opposite direction? I am sorry, I am a bit confused. So we are increasing the Import Duty on CKDs, and trying to convert them to Make in India? And reducing the CBU duties? Its a bit counter intuitive to what we have been hearing since last 2-3 years. Not that I am complaining, but I just think this will be reversed very soon. Rachit
	(1) Thanks

15th February 2018, 11:07	#20
theredliner BHPian Join Date: Jan 2014 Location: - Posts: 764 Thanked: 1,542 Times	Re: Import duties on bikes revised, CBUs to cost less Uncle Trump comes to the rescue of heavily burdened Indian bikers I'm all for local production, but given the paltry sales numbers, the manufacturers wouldn't have bothered with local production any time soon. The only party who benefits with high import duty in case of superbikes is the government. CKD doesn't do much good either. It may add only a handful of jobs while having no positive impact on the component supplier industries as all the components are imported anyways. The way forward would be to increase the sales of superbikes through reduced duties(it will take quite a while). Once the numbers build up, the manufacturers will have a reason to come up with local production. Last edited by theredliner : 15th February 2018 at 11:08.
	(2) Thanks

15th February 2018, 12:04	#21
ani_meher Senior - BHPian Join Date: Oct 2008 Location: Pune Posts: 1,931 Thanked: 3,825 Times	Re: Import duties on bikes revised, CBUs to cost less Developing countries will always try to limit imports by heavily taxing them. Otherwise highly efficient products from developed countries will wipe out the local competition. So I don't think a complete reciprocal taxation is a possibility. Reduction in import taxes is a welcome move, but may be opposed by local players if it drops below comfortable limits.
	(3) Thanks

15th February 2018, 14:12	#23
riteshritesh BHPian Join Date: Aug 2009 Location: Mumbai Posts: 551 Thanked: 705 Times	Re: Import duties on bikes revised, CBUs to cost less Sorry for being OT here,but this is what I always feared by " the make in India" initiative and higher Import duties to "force " the make in India. While the initiative is great, the means to make it happen is flawed. By imposing a higher Import tariff ( which itself is against the WTO mandate), hypothetically, even if the Government achieves its targeted intentions, what will happen if the importing country of India goods imposes a higher tariff on Indian made goods. We will end up with unsold inventories and a huge pile of mess. Trump is threatening ( and rightly so) for motorcycles. Soon it will happen for the Mobile Industry. I wonder what exactly are the intentions in raising import duties on many items this budget, rather than decreasing every year as per WTO norms.
	() Thanks

15th February 2018, 14:59	#24
dextor BHPian Join Date: Aug 2016 Location: Bangalore Posts: 164 Thanked: 320 Times View My Garage	Re: Import duties on bikes revised, CBUs to cost less It looks like a balancing act. Reduce tax on CBU & cover up the loss by increasing tax on CKDs. Our FM & team thinks like a baniya (business man). See the effect of GST on lease vehicles. And all this due to pressure from US. I never understood the rationale behind having heavy taxes on high performance bikes/cars because no one in India is manufacturing them. So they are no way cannibalizing Indian market. Moreover seeing the demand of such products, even Indian manufacturers might start improving their lineups which will also help in better exports. In India having any premium/niche product is considered luxury & luxury in poor country is always penalized through heavy taxation.
	() Thanks

15th February 2018, 16:45	#27
Turbanator Team-BHP Support Join Date: Mar 2011 Location: Gurgaon Posts: 6,703 Thanked: 28,286 Times	Re: Import duties on bikes revised, CBUs to cost less Got this forward from Triumph- Chandigarh group sums up the benefits Who are the gainers? The brands that are likely to benefit from the reduction in customs duties include Aprilia, BMW Motorrad, Yamaha, MV Agusta, Indian Motorcycle and Moto Guzzi. As these brands bring their motorcycles via the CBU route, we can expect their products to be much more affordable. However, manufacturers are still working out the impact of the reduction of duties and will be sharing a revised price list soon. Half-happy There are some brands whose portfolio consists of both CKD motorcycles and CBU offerings, so the impact of the new change in policy will be a bit mixed. Kawasaki is the biggest player in this segment as its liter-class and above offerings will be cheaper (barring the Ninja 1000). However, the hike in CKD duties will affect prices of the Kawasaki Z250, Ninja 300, Z650, Ninja 650, Vulcan S, Versys 650 and Versys-X 300. Prices for the Honda CBR1000RR Fireblade and the Gold Wing will witness a drop while that of the CBR650F and the Africa Twin will increase as they are CKDs. Suzuki only assembles the Hayabusa currently in India, but, it has plans to locally assemble the upcoming GSX-S750 and maybe also bring in the V-Strom 650 via the CKD route. Given the drop in customs duties for CBUs, it will be interesting to see what strategy the Japanese two-wheeler giant adopts. Unhappy One brand that has been particularly affected by the change in government policy is Triumph Motorcycles. The British brand had announced last year that it wanted to locally assemble 90 percent of its products in India. The increase in CKD and the drop in CBU prices has dealt a double blow for Triumph. Commenting on the revision of customs duty, Triumph Motorcycles India MD Vimal Sumbly said, “After the budget, this is a great initiative to cut import duties on CBUs, but for CKDs where the local assembly is done in India, the import duties are increased by 5 percent and the FTA remains unchanged. We would urge the government to relook into this area.” Harley-Davidson will also be very unhappy, as will Benelli. Unaffected The only brand that hasn’t been completely affected by the revision in CKD and CBU prices is Ducati. The Italian two-wheeler giant almost entirely imports its offerings from Thailand. Since India and Thailand have an FTA (Free Trade Agreement), import duties are significantly less despite the bikes being brought in via the CBU route. The only products in Ducati’s current portfolio that are imported from Italy are the Monster 1200 and the Panigale R Final Edition, prices for which will witness a reduction. Even the new Panigale V4 will be coming from Thailand, hence the competitive pricing.
	(10) Thanks

15th February 2018, 18:38	#29
tharunkar Newbie Join Date: Nov 2016 Location: Chennai Posts: 15 Thanked: 35 Times	Re: Import duties on bikes revised, CBUs to cost less Is the Kawasaki Z900 going to be priced lower after this move? My friend has booked the Z900 and it is in transit and to be delivered in a week. I am wondering if there is a price cut , will we still gain since the bike has already been imported and on the way to us.
	() Thanks

15th February 2018, 19:55	#30
ani_meher Senior - BHPian Join Date: Oct 2008 Location: Pune Posts: 1,931 Thanked: 3,825 Times	Re: Import duties on bikes revised, CBUs to cost less ^^^ I think it's better to wait and watch, if possible. It may result in significant savings, or worst it will cost the same after a month or two.
	(1) Thanks