Revving Up Demand: Luxury Cars and India's Customs Duty Overhaul

Mercedes-Benz India MD and CEO Santosh Iyer suggests rationalizing customs duties on luxury cars to boost demand and tax revenue, despite rising input costs and rupee depreciation affecting prices. Improved road infrastructure and macroeconomic stability could further benefit the luxury car market.

Rationalizing customs duties on imported luxury vehicles could stimulate demand and increase tax revenue, according to Mercedes-Benz India Managing Director and CEO Santosh Iyer.

He emphasized that a stable macroeconomic policy and improved fiscal management to counter the declining rupee would aid luxury car manufacturers, who face rising input costs. Iyer highlighted that imported cars priced under USD 40,000 currently attract a 70% customs duty, while vehicles over USD 40,000 are subject to 110%. Last year's GST 2.0 rate rationalization was praised as a positive step.

Iyer argued that reducing customs duties would simplify the process and benefit the economy, suggesting that better road infrastructure could bolster luxury car demand. Mercedes-Benz India plans to raise vehicle prices by 2% quarterly in 2026 due to rupee depreciation.

(With inputs from agencies.)