Bicycle sales to take a hit post import duty hike

With the Budget hiking import duties on bicycles by a sharp 20%, the industry is worried that it will have to pass on these hikes to consumers, which in turn could slow down sales, reports CNBC-TV18's Vineetha Athrey.

If you are planning on buying one of these high-end bikes, be prepared to pay more soon. In an effort to boost indigenous manufacturing the import duty on bicycles have been hiked from 10% to 30% in the Budget.
Consequently, distributors of high end bikes like Trek, Merida, Firefox, and others are being forced to increase prices by Rs 1500-4000. So, with entry level prices of most imported bikes now rising to Rs 17,000 plus, the industry feels this is bound to impact sales.
"Between 10-15% price hike will be passed on to the customer, as this is a severe hike. Prices are also going up for other reasons - rupee exchange rate, cost of manufacturing of products in their respective countries going up, etc are all adding up", says Shiv Inder Singh, managing director of Firefox Bikes.
Ashwath Kapur, director of APPL Bikes says, "Consumers are just getting used to high end luxury bikes in India. It was becoming a lifestyle choice for them. This hike will definitely stop that because the consumer who wasn't thinking twice about buying before purchasing this bike will now do so, and will probably compromise on the quality."
But it seems Indian manufacturers are not happy either because the duty on imported bicycle components has also been increased from 10% to 20%.
India's bicycle market averages around 1.5 crore units annually. Of this around 15 lakh bikes are imported, but around 25 lakh bikes, which are manufactured in India use imported components, as they are unavailable in the country.
So several Indian manufacturers like TI Cycles, who use imported components will also have to hike prices and see a 20-30% impact on their sales.
"We don't have certain components made in India - shock absorbers, gears, break levers, especially quality ones that meet safety standards are not made here, so all manufacturers have to import them. So all these parts will cost higher and will be charged to the customer", says Arun Alagappan, senior vice president of sales and marketing at TI Cycles and BSA Motors.
The bicycle industry has been appealing to the central government for a roll back in import duty hikes, saying most imported components add to safety features of the bikes and are therefore critical. Imposing higher duties on them could end up slowing down these fast-growing, green means of transport. Also watch the accompanying video.