F1 India – No ESC for F1

Added in: News

Well, it isn’t here yet but we can still see some crazy twists & turns. The dream of seeing F1 in India has hit yet another debacle.

The Central Board of Excise and Customs (CBEC) have rejected a duty waiver request of the Indian GP organizers (JPSI) on the grounds that they have failed to obtain an exemption certificate from the Sports Ministry. This comes a day after the organizers had claimed that they have an in-principle approval from the customs department for waiving off the duty. JPSI will have to pay customs duty (160% of the value) for “importing” the entire F1 pit equipment and will be refunded 98% of the duty paid once the equipment is “exported” after the race.

The organizers estimate the cost of the equipment at Rs. 150Cr. This seems especially optimistic considering that the entire pit garage (with equipment’s) and 2 F1 cars along with spares for 12 F1 teams would be “imported” into India for the race. In the end, the customs duty will be borne by none other than the motorsport fans of this country.

The Sports Ministry seems reluctant in granting the tax exemption since it considers F1 as an “entertainment” event and not a “Sport” event. This is especially ironic since the Sports Ministry considers FMSCI as a national sports federation. But Formula One, being the pinnacle of motorsports, is not considered a sporting event because it markets itself with lots of glitz and glamour (It’s like saying the cricket world cup is not a sporting event). The apathy of the Sports Ministry is especially frustrating for a motorsport fan since the Indian GP would be nothing but beneficial for the local economy. The Sports Ministry should consider the following:

• The Indian GP track is built completely by private money (with no subsidies from the government). Unlike other new F1 tracks around the world.

• Hotels around the track are fully booked in spite of the high rates charged for the GP weekend.

• Mum-Del flight tickets currently (with almost 45 days to go) cost Rs. 5k for the Thursday and Friday before the GP weekend, while the same ticket costs little over Rs. 3k for the end of this month.

• A lot of foreigners (officials associated with F1, journalists and tourists) will be visiting and spending money in the country.

• Huge number of motorsport fans will be arriving, living, travelling and spending in the areas surrounding the GP track.

By the looks of it, by giving small concessions on the duty front, the government could reap significant revenues from the indirect taxes on the spending associated with the event. Not to mention that the successful hosting of the GP will improve the profile of India as a tourist destination. The Singapore government recognizes these indirect benefits and exempts the Singapore GP from their goods and services tax. And it is evident to all how they use the GP to successfully market Singapore as a tourist destination.

One can only hope that the Indian GP does not go the Istanbul way due to lack of support from the Indian government.

– Written by Nikhil B

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