Import Duty Slashed on High-End Bikes. Will They Cost Less Now?

The change in import duty is likely to bring the prices of various high-end bikes down.

Honda Africa Twin 1000cc adventure bike could see a price drop soon. 

(Photo: The Quint)

Avid bikers in India will be pleased to know that the prices of high-end imported bikes are likely to get a price cut in the coming months.

None of the motorcycle brands have confirmed this decision yet, but the official word has been put out by the Central Board of Excise and Customs (CBEC) through a notification on 12 February.

According to this order, import duty has been slashed on bikes with more than 800cc engine or less. And very soon these variants of motorcycles which are imported as completely build units (CBU) will be charged with 50 percent of duty.

The change may not be a significant one by the time you end up calculating the on-road prices. Nevertheless, it’s a move in the right direction, which needs further encouragement from the government.

Until now, import of motorcycles with engine capacity of 800cc or less used to attract 60 percent duty, while those with capacity of 800cc or more attracted 75 percent duty.

Experts opine that the revised import duty rates have been rationalised for these motorcycles as it has been an industry demand for long and such high-end bikes are not manufactured in India at present.

According to the CBEC notification, import duty on engine, gearbox, or transmission mechanism as a completely knocked down (CKD) kit in pre-assembled form of motorcycles – not mounted on a body assembly – has been reduced to 25 percent. These pre-assembled parts attracted customs duty of 30 percent earlier.

Members of Harley Davidson Owners Group(Photo: The Quint)

Meanwhile, to promote local assembling as part of 'Make in India' initiative, the CBEC has hiked customs duty to 15 percent on import of engine, gearbox and transmission mechanism as a CKU kit which are not pre-assembled. The duty on these was 10 percent earlier.

But interestingly, those in the bike business believe that the import cost revision hardly makes leeway for employment or industry growth.

Instead, the change in ruling offers chance to brands like Harley Davidson to ship their bikes into the country at cheaper prices, something that the US President, Donald Trump had cited once again.

He emphasised on the tariff imposed by India on Harley-Davidson motorcycles as an example of “unfair” trade practice that the United States must fight back with “reciprocal taxes”, while Indian branded-bikes ship to the US without any taxes levied.

Yamaha MT-10 SP could benefit from the recent change in import duty. (Photo Courtesy: Yamaha)

It has come to our understanding that only few brands are going to benefit from this rule change. As per the existing free trade agreement with multiple countries, brands like Ducati and Triumph remain unaffected, while new entrants like BMW Motorrad, Suzuki and Yamaha among others could pass on the duty cut, to its buyers.

The other thing worth pointing out is that the actual effect of import duty could be less than what has been put out in the notification. While the import duty has come down by 5 percent, this year’s Budget brought itself a hike of 5 percent to customs duties on the import of completely built units (CBU).

(With inputs from PTI)