Luxury car makers in India do not want much from the upcoming Budget, however, they have asked for a holistic and long-term growth perspective for the automotive industry.

Luxury vehicles in the country attract GST rate of 28 per cent with an additional cess of 20 per cent on sedans and 22 per cent on SUVs currently, taking the total tax figures up to 50 per cent.

“Burdened under high duties, GST, cess and registration costs, we urge the government to rationalise the entire tax structure, which eventually will lead to higher volumes for the industry,” Balbir Singh Dhillon, Head, Audi India told BusinessLine.

Equally important is a stable policy regime for an uninterrupted business due to long lead times, which is specific to the luxury automotive industry, he said.

“We seek a holistic view towards the industry in light of the contributions made by the original equipment manufacturers (OEMs) in bringing new technologies to India and also long-term investments already made in India,” Dhillon added.

Policy stability

Similarly, Martin Schwenk, Managing Director and Chief Executive Officer, Mercedes-Benz India, said, “We expect the Union Budget to have a holistic and long-term growth perspective for the automotive industry, by helping to create consumer demand and growth. This year’s budget should look at the existing taxation structure, and consider offering relief and provide necessary stimulus for creating demand and subsequent growth.”

“With growing emphasis on developing the EV ecosystem in India, we expect a long-term stability in the existing e-mobility policies of the government. We expect the current benefits provided to the customers related to GST benefits to continue, thus encouraging more customers to adopt e-mobility. In addition, we expect an increased government spending for accelerate development of the charging infrastructure, in the context of a rapid growth forecasted for the EV segment,” he added.

‘Need booster shot’

According to analysts, the luxury car market in India needs some booster shot from the government right now because the market has not expanded in the last one decade.

“The market has not expanded really in last 10 years, so there has to be an approach as a country to progress in that perspective. The government should help the market grow for the next 10 years with specific approach like on localisation. They should encourage for localisation of content (which they already are doing) and that is the way by which prices of luxury cars will come down,” Som Kapoor, Partner – Automotive sector, EY India, said.

There has to be an environment where government and OEMs work on co-creation of localisation and give some time bound to OEMs for maximum localisation in the coming years, he added.

The luxury cars market in India touched around 26,000 units in 2021, the three major brands – Audi, BMW and Mercedes – contributing around 23,400 units. Mercedes-Benz India has the highest market share by selling 11,242 units in 2021, and has been the number one player for last seven years.

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