ED Raids 17 Sites in South India Over Luxury Car Scam

ED officers have raided 17 locations across South India in connection with an alleged luxury car import scam under the Foreign Exchange Management Act (FEMA). The large-scale operation, conducted on Tuesday, targeted premises in Tamil Nadu, Karnataka, Telangana, and Kerala, including car dealerships, storage facilities, and homes linked to traders and buyers suspected of breaking foreign exchange and customs rules.

Officials say several high-end imported cars—among them Rolls-Royce, Bentley, Porsche, Lamborghini, and Mercedes-AMG models—were found during the searches. Alongside these vehicles, financial records, digital devices, and trade documents were seized to help trace the money trail behind the purchases. Investigators believe some cars were brought into India without paying the required customs duties or were falsely declared as used vehicles to reduce tax, even though they were brand new.

FEMA is designed to regulate the use of foreign currency and ensure that cross-border transactions comply with the law. In vehicle imports, it governs purchases paid for using money transferred from abroad. Violations can occur if funds come from undisclosed sources or if importers bypass legal checks. According to ED sources, this case may involve the misuse of foreign exchange channels and misrepresentation of imported goods, undermining both national tax collection and fair business practices.

India’s import duty on luxury vehicles can exceed 100 per cent of the car’s value. While such rates protect local manufacturers and maintain safety and environmental standards, they also make legitimate imports expensive. This high cost has, over the years, encouraged the rise of a shadow market where buyers seek cheaper, illegal routes. Customs loopholes, ports with weaker enforcement, and demand for prestige brands have made such schemes more tempting.

The raids highlight both the seriousness with which authorities view financial crime and the challenges of enforcing trade rules in a rapidly growing luxury goods market. Supporters of tough enforcement say these actions are vital to protect government revenue and ensure consumer trust. Critics, however, argue that overly high tariffs risk fuelling underground networks, creating a “smuggler’s economy” around top-tier cars.

For now, the ED is sorting through seized evidence, with further action expected against those found guilty. Penalties could involve heavy fines, confiscation of assets, and possible prosecution. Officials have hinted that this investigation is part of a wider crackdown on illegal money flows linked to luxury goods, potentially reaching beyond the automotive sector.

This case is likely to stir debate over whether India should reconsider its import duty structure to balance tax revenue with market openness—without compromising on compliance and safety. It also stands as a reminder that luxury, when obtained illegally, can come with a hefty legal price tag.

With inputs from agencies

Image Source: Multiple agencies