An alleged car smuggler exposes the dark side of India's red-hot luxury market.
By Jason Overdorf
GlobalPost - June 1, 2011
NEW DELHI, India — Luxury automobiles have joined the litter along New Delhi's streets in recent weeks.
Following up on an anonymous tip last month, police recovered an Aston Martin and a Bentley gathering dust on the side of the road in Vasant Vihar, an upscale neighborhood favored by expatriates and wealthy Indians.
But the owners who abandoned their vehicles weren't simply looking for an upgrade, officials from New Delhi's Directorate of Revenue Intelligence (DRI) say.
They ditched the cars in the hope of avoiding prosecution in an ongoing probe into a New Delhi car dealer's multimillion dollar smuggling ring — which police allege involves a British businessman and diplomats from North Korea and Vietnam.
Already, some 40 luxury cars — including Lamborghinis, Ferraris, Hummers, Aston Martins, Rolls Royces and Bentleys owned by film stars, cricket players and politicians, police say — sit forlornly in a police impound lot.
And as investigators gradually uncover the details of the alleged international smuggling racket run by car dealer Sumit Walia, an intriguing story about the dark side of India's red hot luxury market is starting to emerge.
According to charges filed against Walia by the DRI and the Delhi Police, Walia allegedly bribed diplomats from North Korea and Vietnam — and perhaps other nations — to allow him to import cars in their names.
Because diplomats are allowed to import personal cars duty-free, the scheme helped him avoid customs duties, that otherwise run as high as 100 percent, when he sold the cars on to the real customers.
But that wasn't the only method Walia used, according to a police report filed by Benoy Berry, Burundi's Honorary Counselor in India. Berry claims that Walia simply stole two Range Rovers and a Porsche that Walia imported for him, and police say some of the other imported vehicles may have been stolen in Britain, France, Singapore and Japan before being brought to India.
Based on the cars recovered so far, the DRI estimates that the smuggling ring cost the treasury at least $2.5 million in taxes.
To be sure, Walia wouldn't have had a tough time finding customers.
Despite its hefty import penalties, India is the world's second fastest-growing market for luxury cars, behind China's. At the time police picked up the Bentley and the Aston Martin, Ferrari was due to open its first dealership in just a few days — joining the ranks of Rolls Royce, Lamborghini, and Bugatti and Maserati.
Legal sales grew by 60 percent last year, as the booming economy powered the purchase of some 16,000 high-end automobiles. Meanwhile, tax evasion is ubiquitous, with cash stashed in safety deposit boxes all over Delhi and every other Indian city, and as much as $1.4 trillion in so-called "black money" stashed in numbered accounts in tax havens abroad.
According to a report in the Indian Express, a local English-language daily, the DRI has asked the Ministry of External Affairs to discuss the alleged involvement of diplomats in the smuggling ring with the North Korean and Vietnamese embassies.
The DRI is also investigating the alleged involvement of Ashwin Kalra, a British citizen that Walia named as an associate upon his arrest. Kalra reportedly runs a U.K.-based company called A.K. International, which the authorities say may have supplied some of the automobiles involved in the case.