The Union Finance Minister P Chidambaram sure had a sneaky little surprise for the motoring scene in India. As per the new proposed Union Budget, imported motorcycles will now see an increased taxation. The existing customs duty was at 60% for manufacturers and this number has been increased to 75%, a quick big single hike by 15%. For sure manufacturers will have no choice but to pass on the increase in costs to its customers.
This hike might not be all bad news for the industry and in-fact could be a blessing in disguise on a larger scale, as higher customs rate would push manufacturers currently importing bikes to set up shop in India and move at-least to a CKD (Complete Knocked Down) system which would in turn result in a more competitive pricing for the currently imported motorcycles. A good example is that of Harley, they have set up an assembly unit which has already resulted in a drop of prices on select models. Another manufacturer that has been in the news for a long time now is Triumph Motorcycles, they have also confirmed that they would be coming in via the CKD route to keep the pricing competitive. Other top manufacturers like Ducati, BMW and Aprilia still import their bikes as a whole. That said there is intent from the side of BMW and Aprilia for a CKD system in the near future.