The Budget proposes to hike the import duty on motorcycles with engine capacity of 800 cc or more from to 75 per cent from 60 per cent. The duty on high-end motor vehicles has also been in increased from 75 per cent to 100 per cent, which means the Ferrari or Lamborghini you have been eyeing for long becomes dearer to you.

The finance minister seems to think you won’t mind paying “a little more”.

According to Abdul Majeed, Auto Practice Leader, PricewaterhouseCoopers, the new duty structure may have some effect, but not an “out of context” impact on consumers of luxury products as most of them are high net-worth individuals. However, this may push automobile brands to assemble more in India as it may be difficult to keep importing in the long run, he said.

Sports utility vehicles (SUV), which have been doing well on Indian roads, are also bound to stretch your purse a bit more, with P. Chidambaram announcing a hike in excise duty from 27 per cent to 30 per cent.

His logic is that if you are going to occupy greater road space, better be ready to cough up more. (However, the increase will not apply to SUVs registered as taxis.)

This announcement may impact consumer spending on SUVs, fears Majeed.

(This article was published on February 28, 2013)
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