After Volkswagen, Indian Govt Accuses Kia Of 1,350 Crore Import Duty Evasion: Details
Last year, we came across a report about Volkswagen India, where the Indian government had sent them a notice for allegedly evading import duty. After Volkswagen, the Indian government has accused South Korean car manufacturer Kia of import duty evasion. According to reports, the Indian government has alleged that Kia misclassified imported components to evade $155 million in taxes.
In 2024, the Indian government issued a notice to Kia Motors India, stating that the manufacturer had incorrectly declared parts for assembling the Carnival MPV. According to reports, the Indian government alleges that Kia split shipments to reduce customs duties. Kia has responded to this matter, calling these allegations false and submitting a document to support its stance.
In its response, Kia stated that it adheres to the rules and regulations of the country and has cooperated with the authorities. While Kia has responded, it has yet to receive a reply from the authorities. The 432-page notice issued by the Indian government claims that Kia imported parts for the Carnival separately through multiple ports to lower customs duties.
The notice mentions that by following this method, Kia managed to import these components without attracting attention from customs authorities. If found liable, the South Korean car manufacturer may be required to pay up to $310 million in fines, including penalties and interest, under Indian tax law. Reports also mention that Kia has already deposited $32 million under protest as the case proceeds.
The current controversy is actually part of a larger issue between the Indian government and Kia over tariff regulations. In 2022, Indian authorities searched Kia’s offices and manufacturing facility in Anantapur, Andhra Pradesh. During the investigation, statements were taken from officials, including Chief Procurement Officer Lee Sang Hwa and Chief Finance Officer Kiho Yoo.
The tax notice claims that Kia employees altered their statements and attempted to mislead authorities. It also states that Kia imported over 90% of the Carnival’s parts in completely knocked-down (CKD) form, which incurs a higher tax rate of 30%-35%, instead of the 10%-15% applied to separate shipments.
Similar allegations were made against Volkswagen as well. However, the Indian arm of Volkswagen has responded to the Indian government with a legal notice. According to a Reuters report, Volkswagen has sued the Indian government through its lawyers at the Bombay High Court. The German automaker is said to have petitioned the court to intervene and quash the $1.4 billion tax notice against it.
The Volkswagen Group has moved to the court, stating that such a large tax demand would put its $1.5 billion investment in India at risk and that this order would adversely affect foreign investor sentiment in India. Just like in the case of Kia, the Indian government is accusing the Volkswagen Group of importing parts into India by paying a 10%-15% duty instead of the 30%-35% duty it was supposed to pay.
The Volkswagen Group allegedly achieved this by splitting the import of a full car kit into multiple orders. While Kia is facing this issue with the Carnival, Volkswagen’s case involves as many as 14 models.
Via: CNBCTV18