Earlier, Iyer had indicated that, owing to the rupee’s depreciation, Mercedes-Benz India plans to increase vehicle prices by 2 per cent every quarter in 2026.Ahead of the Budget 2026, Mercedes-Benz India Managing Director and CEO Santosh Iyer has called for a rationalisation of customs duties on imported luxury cars, saying it could stimulate demand in the premium segment and ultimately increase government tax revenue.
Speaking to PTI, Iyer highlighted the challenges faced by luxury car makers due to rising input costs and the ongoing depreciation of the rupee, which have necessitated price hikes and affected demand.
Terming GST 2.0 — under which rates were rationalised last year — as “a very positive step,” he said, “The same should happen for customs duties as well.”
Currently, imported passenger vehicles priced below USD 40,000 attract a basic customs duty of 70 per cent, while those above USD 40,000 face an effective duty of 110 per cent. “This customs duty can be rationalised and brought under one slab,” Iyer suggested.
He added, “These cars are not affecting the total mass market. They are operating in a different segment. Only 5-8 per cent of the cars we sell in India are facing customs duty and import duty. So, rationalising it, reducing it will make it simpler and help to grow, help get more taxes and get even better cars on the roads.”
Iyer also stressed the role of macroeconomic stability in supporting the luxury car market. “A more stable macroeconomic policy, if there is a better fiscal management in the Budget that helps the forex movement and arrests the decline of the rupee, can help (improve) our demand,” he said.
Earlier, Iyer had indicated that, owing to the rupee’s depreciation, Mercedes-Benz India plans to increase vehicle prices by 2 per cent every quarter in 2026.
Highlighting the impact of infrastructure development on luxury car sales, he said, “We would ideally like to see that more capex is allocated for roads. That helps for the overall economy and also the luxury car market.”
