CBU Route: Why Importing Motorcycles from Thailand is Beneficial for India?
Thailand and India have a cordial relationship because of which, majority of the motorcycles from foreign brands are sold at a lesser value in India
As we all know, the automobile industry around the earth is costly because the prices of the vehicles have consistently been exorbitant; especially the price-tags of those vehicles offered by foreign producers who operate in various countries. The prices have always been excessive because of the evolving economy of the world, along with various ranges of custom duties exercised by different countries. Out of all the vehicle industries, India’s two-wheeler industry is massive that comprises millions of patrons and is a billion-dollar trade. Therefore, all the major two-wheeler manufacturers of the world prefer to sell their motorcycles in India.
Unfortunately, the Indian two-wheeler market is a price-sensitive market and therefore, setting the price tag of premium motorcycles is a dilemma for every leading company such as Ducati, Kawasaki and Triumph to mention a few. For this infer, most of the brands rely on the completely-built-unit (CBU) route via Thailand instead of the completely-knocked-down unit (CKD). In short, importing motorcycles in India via Thailand is a beneficial option for most foreign brands.
Before we understand how, allow us to summarize the terms CBU and CKD. CBU and CKD routes are processes of importing a vehicle into a country. CKD means a manufacturer imports vehicle’s parts in a country and assembles it locally. CBU means a vehicle is wholly produced in one country and is then imported into the other country where the company chooses to sell it. Usually, the import duty on a CBU unit is greater compared to a CKD unit.
As we mentioned above, the import duty on a CBU unit is higher compared to a CKD unit. However, most foreign brands prefer to utilize the CBU route to India via Thailand, but why? India and Thailand have a healthy relationship because the two Asian countries share a Free Trade Agreement (FTA). The Free Trade Agreement ensures lesser custom duties on the CBU units arriving from Thailand to India whereas, in 2018, the Central Board of Excise and Customs (CBEC) hiked the custom duties on CKD units in India.
To ensure the price tags of the motorcycles are economical to the Indian buyers, several foreign brands produce and assemble their motorcycles in Thailand and then ship those units to India. For example, Kawasaki and Triumph are two leading brands that mostly import motorcycles from Thailand to sell in India.