Andy Mukherjee, Columnist

Luxury Cars Hit a Pothole in India

Hiking taxes on high-end vehicles sets a dangerous precedent for the nation's manufacturing ambitions.

August 8, 2017 at 2:05 AM UTC

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.

Inside The Mercedes-Benz India Flagship Store — Photographer: Sanjit Das/Bloomberg

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First it was cigarettes that got stubbed; now it's the turn of SUVs to face an endurance test. By becoming a tinkerer's playpen, India's nationwide goods and services tax is emerging as a fresh source of uncertainty for business.

India's GST Council on Monday recommended an additional levy of 10 percentage points on luxury cars and sports utility vehicles, taking the total to 53 percent. The change comes barely five weeks after the value-added tax replaced a plethora of federal and state levies. Last month, a similar bump in cigarette taxes spooked investors.