In the union budget FY26, presented by union finance minister Nirmala Sitharaman on Saturday, the government has slashed the basic customs duty (BCD) on the import of completely built units, semi-knocked down (SKD) and completely knocked down (CKD) units of motorcycles.
As per the budget documents, the BCD on the import of CBU of motorcycles with engine capacity not exceeding 1600 cc has been slashed from 50% to 40%. Similarly, BCD on import of SKD motorcycles with engine capacity below 1600 cc has been slashed from 25% to 20%, while BCD on import of CKD motorcycles has been reduced from 15% to 10%.
For CBU motorcycles, with 1600 cc and above engine capacity, the BCD has been reduced from 50% to 30%. Similarly, BCD on import of SKD motorcycles with engine capacity either equal to or above 1600 cc has been slashed from 25% to 20%. BCD on import of CKD motorcycles has been reduced from 15% to 10%.
The development is likely to increase sales of premium motorcycles in India owing to premiumisation.
Notably, the BCD on import of certain cars, motor vehicles, mopeds, bicycles, and yachts have also been reduced but there has been no change in effective rate owing to the addition of the Agriculture Infrastructure and Development Cess (AIDC) component.
The government has also announced exemption of customs duty fully exempted the BCD on waste of lithium-ion batteries, scrap of cobalt powder, waste and scrap of lead and zinc, respectively, along with twelve critical minerals, to boost local manufacturing of EV batteries.
The domestic automobile players have welcomed the announcements made during the budget. “We commend the 2025 Union Budget for its continued support of robust consumption growth through changes in the tax structure, effectively placing more disposable income in the hands of the Indian consumer. This will encourage private sector capex to move in a positive direction,” says Anish Shah, MD, Mahindra & Mahindra Limited and Group CEO, Mahindra Group.