India-UK FTA

[panditji]

https://economictimes.indiatimes.co...e-agreement-pm-modi/articleshow/120933853.cms


I am assuming audio equipment is under zero tariffs but will check when more details are available.. Harbeths should become cheaper and am wondering what else would become VFM from the UK...

 

[ajuvignesh]

https://economictimes.indiatimes.co...e-agreement-pm-modi/articleshow/120933853.cms


I am assuming audio equipment is under zero tariffs but will check when more details are available.. Harbeths should become cheaper and am wondering what else would become VFM from the UK...

harbeths becomes cheaper only if the distribution networks want it to be cheaper. Else, the money will go into their pocket.

 

[sidvee]

Yes I agree with Ajuvignesh, unless the distributor decides to pass on the duty reduction, it is unlikely, that we, as end consumers will see any reduction. It is not only Harbeth, there is Rega, Chord, in Electronics, Spendor, ProAc in speakers, whole bunch of cable and accessories etc.
One can always hope though.
Cheers,
Sid

 

[Kapeel]

I am sure it is possible to raise the issue with the manufacturer. If they see potential for sales is hampered by unrealistic profit margins than neighboring countries, they are bound to act.

 

[panditji]

If the tariffs are zero then UK companies should be selling factory direct to the Indian consumers.. Most of the customs hassles are due to tariffs and if that is done away with then it means speedy clearance... I hope the UK companies take advantage of this opportunity ...

Now looking forward to the US FTA soon and hopefully the EU FTA by the end of the year...

 

[Fiftyfifty]

If the tariffs are zero then UK companies should be selling factory direct to the Indian consumers.. Most of the customs hassles are due to tariffs and if that is done away with then it means speedy clearance... I hope the UK companies take advantage of this opportunity ...

Now looking forward to the US FTA soon and hopefully the EU FTA by the end of the year...

Dunno about audio gear, but I'm sure single malts will be cheaper

 

[panditji]

Dunno about audio gear, but I'm sure single malts will be cheaper

Not only will they be cheaper but the market will be flooded with a huge variety ... The UK also makes hundreds of gins which will all become cheaper and freely available...

 

[sidvee]

I am also not too optimistic about single malts etc. getting too cheap. Simple reason, liquor pricing is regulated by states - and is the only income any state gets (w/o center interference, other being tax on fuel). So most likely the states will pocket the difference and give some token reduction. For instance I have not seen any reduction in American bourbon prices in Hyderabad, though a few weeks ago there were reports that duty on bourbon was cut in half. Not sure if this will be in spirit (pun intended) of the FTA, but unless a ground reality check is done - as to whether the benefits are actually passing onto the consumer all these are all just headlines. Already when one imports any electronic item for personal use, the duties levied are at 70-100%, which cannot be legal under WTO rules (of-course duty component is low - in line with WTO, but there are cesses, surcharges, freebie taxes etc etc.).
We currently have a FTA with Australia - has anyone seen any reduction in items from Australia - wines or audio equipment? For instance, KRIX speakers are made in Australia.
Cheers,
Sid

 

[prem]

On speakers and amplifiers the duty is only like 10%. The IGST is 28%. Other cess is like 4%. So the only thing you’ll save is 10%.

 

[panditji]

Fingers crossed for Haryana... The American liquor will take another month to reduce prices as and when the next shipment comes by sea and reaches the distribution channel..They will have to sell the current stock first before the new shipment reaches the stores....

But yes some states might increase the taxation and the distribution guys/retailers may also increase their margins while passing a small benefit in price reduction... However it is upto us the consumers to not buy and make them competitive just like in audio...

On speakers and amplifiers the duty is only like 10%. The IGST is 28%. Other cess is like 4%. So the only thing you’ll save is 10%.

The IGST is offset by the GST when the importers sell the equipment to us so that is no cost to them if they sell the stuff with a bill... For personal use, the IGST is a cost.

 

[sidvee]

Liquor trade in India, unfortunately is controlled by the very rich and powerful (see the whole AAP Govt., previous Telangana Govt. Aurbindo Pharma scion etc. in the Delhi liquor scam, and now another Andhra Liquor scam in the headlines). Unless the Finance ministry along with the ctr. Govt. leans on the states, nothing much will change imo., but as i said earlier one can hope. As far as audio equipment goes, too small of a market, for anyone to bother (I have talked to a few mfrs. in the past and they are content with their local distributors to handle everything, being that it is a minuscule market for them)
Cheers,
Sid

 

[prem]

I didn’t understand. The IGST/GST will still be passed on to the consumer.

 

[Nikhil]

This is interesting! Looks like I might be able to afford another pair of ATC speakers soon. (just kidding!)
But good to know that the UK is implementing a FTA with India - long overdue in my opinion.

In truth so many goods are taxed heavily here and for no reason. Many are not even available locally but our tax authorities truly believe that they have divine rights to tax the hell out of it. The recent US Tariffs has actually put a spotlight on how damaging these tariffs are but somehow we have been forced to accept them all these years. With the increased awareness I am hoping that there will be a movement towards reduction of duties for the Indian market.


.

 

[Analogous]

Yes I agree with Ajuvignesh, unless the distributor decides to pass on the duty reduction, it is unlikely, that we, as end consumers will see any reduction. It is not only Harbeth, there is Rega, Chord, in Electronics, Spendor, ProAc in speakers, whole bunch of cable and accessories etc.
One can always hope though.
Cheers,
Sid

Buy direct?

 

[Analogous]

If I am not mistaken it’s UK that has reduced tariffs for Indian goods imported to UK across the board (?)
Tariffs in India for UK manufactured products have been reduced for some items only?
Please correct me if my understanding is wrong

https://www.telegraphindia.com/business/ambitious-india-uk-free-trade-pact-slashes-tariffs-opens-markets-and-aims-to-double-trade/cid/2097937

 

[sidvee]

Buy direct?

I guess we will have to wait and see. Hopefully there is some meaningful reduction in prices of audio eqpt., but I am very skeptical.
Cheers,
Sid

 

[Analogous]

Whiskey lovers have cause for celebration
History repeats itself
The British get cheap textiles and we get their desi maal

 

[square_wave]

Yes I agree with Ajuvignesh, unless the distributor decides to pass on the duty reduction, it is unlikely, that we, as end consumers will see any reduction. It is not only Harbeth, there is Rega, Chord, in Electronics, Spendor, ProAc in speakers, whole bunch of cable and accessories etc.
One can always hope though.
Cheers,
Sid

If there is zero tariff and if the dealership wont pass it on, people can just import, no?

 

[sidvee]

If there is zero tariff and if the dealership wont pass it on, people can just import, no?

Yes one can do that for sure, but here are a few points to consider.
1) Will a manufacturer ship direct while circumventing his distributor (if he has that model). Usually in the West distribution agreements are sacrosanct, unlike India where everything goes. So one cannot deal direct with mfr.
2) Then we have to deal with a local distributor (not sure if they will deal with a overseas customer if there is an India distributor in place). If they do so then at what price? Local srp minus local gst I would assume.
3) If an item costs $100 and in UK with local tax say $120, they can ship to India at $100. So let us assume they do that, one has to has add shipping costs, which can be high. Let us assume shipping is $15 (actually for speakers and other large items it can be much higher). So now landed cost in India is $115. Now we have to add 28% gst, plus a bunch of cesses. Say approx 40%, which is $46, so total is now $161.
4) Meanwhile, however the distributor in India doesn't buy at $100 from the mfr. He probably buys at $50-$60. Plus he doesn't buy 1 unit, he buys a larger qty, regularly, so his shipping cost will be lower say $10. So for him his landed cost is $70 plus 40% of which he gets 28% back when he sells the unit (I am still assuming 12% non refundable cesses). So distributor effective cost is $78.4 vs our cost which is $161.
5) I think if we approach the local distributor, we will get a similar price after some negotiation.
All of the above assumes that the distributor has a rational pricing structure, however some brands in India (I won't name the distributors but you can guess) are marked up so high (where the D&D wants to cover his entire year overhead in 1 sale to you), this option of importing yourself might work, provided the UK Distributor agrees to cut out the Indian distributor and sell direct to you.
If there are no distributors in India, then importing from a UK distributor may work, but the cost is going to be high regardless.
Above is my understanding, I may be wrong.
Cheers,
Sid

 

[square_wave]

Yes one can do that for sure, but here are a few points to consider.
1) Will a manufacturer ship direct while circumventing his distributor (if he has that model). Usually in the West distribution agreements are sacrosanct, unlike India where everything goes. So one cannot deal direct with mfr.
2) Then we have to deal with a local distributor (not sure if they will deal with a overseas customer if there is an India distributor in place). If they do so then at what price? Local srp minus local gst I would assume.
3) If an item costs $100 and in UK with local tax say $120, they can ship to India at $100. So let us assume they do that, one has to has add shipping costs, which can be high. Let us assume shipping is $15 (actually for speakers and other large items it can be much higher). So now landed cost in India is $115. Now we have to add 28% gst, plus a bunch of cesses. Say approx 40%, which is $46, so total is now $161.
4) Meanwhile, however the distributor in India doesn't buy at $100 from the mfr. He probably buys at $50-$60. Plus he doesn't buy 1 unit, he buys a larger qty, regularly, so his shipping cost will be lower say $10. So for him his landed cost is $70 plus 40% of which he gets 28% back when he sells the unit (I am still assuming 12% non refundable cesses). So distributor effective cost is $78.4 vs our cost which is $161.
5) I think if we approach the local distributor, we will get a similar price after some negotiation.
All of the above assumes that the distributor has a rational pricing structure, however some brands in India (I won't name the distributors but you can guess) are marked up so high (where the D&D wants to cover his entire year overhead in 1 sale to you), this option of importing yourself might work, provided the UK Distributor agrees to cut out the Indian distributor and sell direct to you.
If there are no distributors in India, then importing from a UK distributor may work, but the cost is going to be high regardless.
Above is my understanding, I may be wrong.
Cheers,
Sid

Totally agree with you. It is much better to buy from a dealer as long as the pricing is similar to what you calculated. 120 vs 161. With some bargaining, you may get it at around 150 or thereabouts. I was thinking about the atrocious markups a few of the dealers do :-/

One retail guy once calculated foreign retail price + customs + shipping and few other charges + some bribe he has to pay + all the sorrow and other horror he has to endure which equated to about 2.5 times of foreign retail!