High-end watches to cost more as duty doubles.

NEW DELHI: Just when things had started running like clockwork, India's fledgling luxury watch market is bracing for another jolt, as customs duty has doubled to 20% on imported watches and clocks. So, if you have been saving up for that lovely model of Seamaster from Swiss watchmaker Omega, be prepared to shell out more. For instance, a Seamaster, which would have set you back by around Rs 2.87 lakh, will now cost you more than Rs 3 lakh. Similarly, a Breguet worth Rs 5 crore will now cost Rs 30 lakh more.

"After GST revision from 28% to 18% on watches, India had become one of the cheapest destinations for luxury watches," said Anil Madan, proprietor of Johnson Watch. "Clients, who shopped abroad, had started buying watches here. But the honeymoon is over and we are back to square one."

The celebratory period lasted roughly two-to-three months for domestic luxury watch retailers. Before the introduction of GST, watches were taxed at around 12.5%. The GST pushed up the tax rate to 28% before it was rolled back to 18% in November.

"International watch companies said it's a joke," said the owner of a luxury watch boutique chain. "I mean, there is no consistency on taxes. First you decrease it, then increase it, then decrease it and increase it again."

Customs duty on watches is incorporated in the cost price and GST is calculated over and above that. Several luxury watch boutiques that TOI contacted, said new prices would be effective April onwards. "Unfortunately, luxury is always at the receiving-end in India," said a manager at an Ethos Watch Boutique.

Before the customs duty hike, the dual-blow of demonetisation and GST weighed heavily on the luxury watch market because most transactions in the luxury segment were cash-based. Wealthy shoppers wary of the crackdown on black money had started to shop abroad. Retailers turned to offering heavy discounts to tackle tepid demand, despite taking a hit on their margins.

"Things had just started to settle down for the luxury watch segment," said Dinaz Madhukar, executive VP at DLF Luxury Retail & Hospitality, which operates luxury retail mall Emporio. "'Make in India' is a great initiative but the hike in customs duty is definitely going to impact the luxury watch market," Madhukar added.