F1 and India

In the run-up to the third Indian Grand Prix, the state government of Uttar Pradesh has demonstrated why the sport is not going to work in the country. The government has asked the courts to withdraw its entertainment tax exemption on the Indian Grand Prix organizer Jaypee Sports International. The decision will cost Jaypee around $5 million. There is also an accusation that the group did not correctly declare its income from the event.

The impression is, once again, that India does not understand the value that such an event will give. Instead the F1 teams and organisers, not to mention the media, are made to jump through bureaucratic hoops to visit the country.

The problems are such that the Formula One group, with the agreement of the teams, has dumped the race in 2014 (amid much cheering in the paddock) and it is unlikely that the country will get another race unless its bureaucrats understand how such things work.

If they do not, or do not want to understand, then F1 in India is dead.

65 thoughts on “F1 and India

  1. I dunno Joe . From my perspective its yet another case of SSDD and SNAFU when it comes to doing business in India regardless of what kind of business it is . Just my opinion mind you … but ……

  2. Mr Ecclestone’s blood sucking greed too is an important reason. Anyway we have greater issues to worry about in India frankly.

      1. He’s to good at busniess for his own good. How can the teams allow this to happen? There must be more to it than it seems? It all gos back to Ferrari, he has then onboard and that’s all that matters.

        1. Because racers do not understand business (and vice versa). F1 is all about business now. Bernie’s a businessman (who realized he was a failed racer/driver very early on); there would perhaps be no teams but for his foresight 30 years ago, not in their current format anyway… imho

      2. Actually Joe, they are both good points.

        The host should be in position to profit, not struggle. And that money just feeds CVC in large part.

        F1 is not just a financial mess, it is a travesty to those of us with five decades invested. Money has always talked, but the volume it shouts with now drowns things such as passion and dedication.

        On the other hand, I can only nod with some disdain at the decision to toss a country so patently obstructionist to the F1 community.

    1. Ecclestone’s “blood-sucking greed” has created an industry that has provided, and continues to provide, tens of thousands of jobs – many of them at salaries way beyond the average.

      1. With you on the employment and the spinoff for UK in particular – but is the salary point a good one in the context of the parlous state of F1? Surely these and a lot of other cost issues have led to the situation like the current paydriver issue where money talks far more than talent

  3. hi joe. I think this might be a political vendetta. The current govt is a rival to the previous one which supported the JP group.

  4. Hmmm, I can understand where you’re coming from, Joe. But as you F1 journos sip on high-quality mineral water from the team hospitality centres, thousands of kids are struggling to get their daily meals on the sub-continent.

    The politicians will never understand because they’d rather prefer that “F1 in India is dead” instead of seeing their compatriots fare likewise.

    Of course, they’re a damn corrupt lot and much of it could potentially go into their pockets but, ultimately, $5 million is spare change for the F1 paddock.

    In the end, it will be Jaypee Sports International that will truly bear the cost of all this political wrangling.

    1. Well, if that is how you feel, sort out your country! Don’t get ancy with those who come to try to help. Stop the corruption, get rid of the idiotic bureaucracy and get the money through to the people…

      1. Suhas, maybe you don’t know how many hotels and tour operators made a killing during the F1 race. In any case, if we don’t have the race, will our poverty problems get sorted out? I don’t think so.

      2. “Idealism increases in direct proportion to one’s distance from the problem.” You sound awful far away Joe.

          1. So F1 comes to India to help the countrys poverty problems? I’ll be supporting Oxfam F1 Team next year then! If that was the case then we’d be having African GP’s too. F1 goes to India because it is an emerging world power, but, unfortunately with extremes of wealth and poverty.

          2. I’m sorry, is the inherent difficulties of doing business in India one of those badly kept secrets that we don’t acknowledge? If I said it was annoying to have to partner up in a JV with a a Chinese firm to do business in China, would that also be an unspoken no-no? India is famous for saturating everything in red tape. If this causes you concern, people, then I suggest you probably don’t have a petulant swipe at Joe but learn from the adage about what happens if you’re not part of the problem…

  5. Right said, Joe. While every other government in the world wants and tries to make things easier for F1, our guys seem to want to plunder the last possible rupee out of teams. As for our politicians, all they know is how to swindle money and fill up their Swiss bank accounts. As a journalist who covers racing, it beats me how things never get into people’s thick skulls.

  6. It’s seems they just don’t get it. I’ve never been but I have friends who have. They got of a train a few stops late and ended up in the slums in new deli. It was an awful experience for them, they got robbed, assaulted etc ect. Awful poverty. I had considered going to the F1 race but following your blogs and my friends views have put me off. Did you find out anymore info on the mechanical traction control system? What’s your view on it? Do you think the vet could have pulled away after the SC the other month without a stand out vehicle advantage?

    1. Let’s not generalise things here about being mugged or robbed in India. Millions come to India but they all don’t get robbed. But yes, the people in power need to learn a lot.

  7. It is TRUE that India needs to be easy on F1 when it comes to Custom and Income Tax Laws but blaming everything on government is not right. It is a fact that F1 is elitist sport, and under current laws the sport should be chargeable to Entertainment Tax which infact was exempted by UP government till Jaypee failed to do its bit. An error on part of organiser should not be blamed on governance.

    1. I agree completely. You have caught the point that everyone seems to be missing.

      While the Govt. has been less than completely supportive, it appears that Jaypee Group also haven’t been forthright on their part. And the entertainment tax will affect only Jaypee Group and no one else (FOM/teams/personnel/spectators). While I admire Jaypee Group for bringing F1 to India, they and their top management are not political novices by any means.

      What really is poor form by the Govt. is the mess up on Custom duty and personal tax, if they have not been sorted out this time around too. It beats me how they can even consider taxing equipment bought for an event, an event which generates so much financial reward in terms of tourism and employment without costing the tax payer…

      1. This stuff does not matter to F1. India either wants F1 or it doesn’t. If you don’t, then F1 will say “Screw you” and will go somewhere where it is appreciated. You can go on arguing about the red tape for years to come. F1 does not give a toss. The key question that India needs to ask is this: Is having F1 a good thing? The answer is clearly yes, not least because it helps to change the image of the country AND the government is getting that for free, but the silly officials want to play their bureaucratic games, stamp their rubber stamps and mess it all up…

        1. This space does not seem to be open for discussion. Your reply seems to be centred toward “This is my opinion and it is not open to discussion”.

          By the way, if government is giving exemptions then it is not getting anything for free. There is a consideration involved for all the benefits available. The question arises in lack of judgement in determining that potential.

          But you are free to diss without reason again. Cheers!

          1. I am simply telling it as it is, from the F1 perspective. You can comment as much as you like, but this is what people are thinking.

            1. Oh! My basic idea of a blog until now was that it is expression of opinion which is open to discussion. But I was obviously wrong. Thanks for correcting.

  8. Well, they were never going to hit the 100,000 visitors mark after the initial euphoria waned. Nobody is going to make the trek to Delhi and then to the track (seriously, they couldn’t find a place in the west or the south of hte country?) and then pay the exorbitant (in comparison to cricket match tickets) ticket prices. If you need to put people in the seats, location of the track needed to be more favourable and also ticket prices. You cannot expect so many people to attend paying $200 per. Madness.

    As for govt interference, if it needed to be subsidised by the government (and helped in land acquisition) then how viable was it ever going to be? Besides, what is the economic impact of an F1 race in a city like Delhi when the number of tourist numbers are already quite high, recent rape incidents notwithstanding? One never gets these numbers. On the one hand, we have Korea where the race organisers are losing hundreds of millions and here we have people accusing the government for not extending benefits. Truth be told, does India need F1? There are as many television viewers in the country as the Uk (per 2011/12 numbers, approx). So they get their fix irrespective of whether a race is held in the country or not. I don’t see why it needs govt subsidies. There are higher priorities.

    1. May be true. BUT. The time for this discussion was before the track was built. Building the track and then making a mess of running the GP makes India look like a bunch of idiots. To me the main damage is to India’s already poor reputation as a place to do business.

  9. I spent 13 weeks in India working on the Ghandhi film, and getting in and out of the country was a nightmare, even allowing for the fact that the Indian Government was providing much of the infrastructure and finance for the Indian end of the shoot.

    The people are lovely, from the poorest up to the Sikh taxi drivers, but the Government at the time and now just doesn’t ‘get it’ in terms of running a large country with millions on the bread line, endemic corruption at all levels and on top of that they have the caste problem as well.

    I know a lot of people blame the British administration prior to Partition for all the woes, but they’ve had years to get out of our shadow and organise themselves, but they seem tied to their tribal/caste system which is crippling their economy.

    Looking at what China has done (with reservations about certain aspects) with its country, India should really be doing better. They need to look at a far bigger picture than they are now.

    1. People blame the British for everything but it is like Monty Python’s “What did the Romans ever do for us?” scene…

  10. Many of the threads I read about F1 on this blog give me the impression that the aim of the game is to make a quick buck… I do not get the impression that sustainable business plans and a long term view are valued that much any more in F1. Rather than future earnings it all seems to be about cash in the bank now… quite a shame really, and it gives me the feeling that we will see many F1 tracks, barely used, abandoned in the next years. As you say Joe, a shame people do not learn from mistakes.

  11. If you looked at Idian cricket in the early 2000s, particularly the politicized BCCI, this was entirely foreseeable. You can’t do business in sports in India without political overtones and bureaucratic hassles.

  12. Shame as the track seems to be one of the better Tilke designs. But I’m sure he’d be more than happy to move on and build another one somewhere else.

  13. Wow! F1 circus is willing to spend a night in a brothel (because of lack of hotels) but god forbid they are made to jump a few hoops. And quite frankly, few would notice if F1 wasn’t to return to India. And why again should F1 be exempted from taxes of any kind?

    1. Because that is what you do if you want F1. If not, fine. India is not ready for F1 and if the current attitudes continue I fear that the demographic advantage that India will have in the years ahead will be wasted, wrapped in red tape with all the money offshore. That would be sad, but who is going to change it?

    1. ROFL – Come 2040 if Indian bureaucracy doesn’t change the country will form a miniscule part of the overall Asian economy regardless of its proportionate population.

    2. Yet, in the context of F1, the country hosts the majority of the teams and a track with a long-term contract.

      What does the majority of Asia have, Singapore not-withstanding?

  14. Been living in India ever since I was born and have been following F1 since 1996. While I do not dispute one bit on bureaucratic hurdles one will have to get through, do you think FIA & JP Sports did not know of them 3 years back when they signed up? Or do you think the hurdles have increased over these 3 years that it is now unbearable to take the pains to have Indian Grand Prix.

    As far as entertainment tax issue, which FIA nor the followers care one bit and should not, it is not an arbitrary decision. Issue has been pending for long and I am sure JP Sports has factored it into their risk management system. As much as I do not like the events that transpired, F1 economics and Indian system will always be at loggerheads.

  15. Sad news for us F1 fans. But equally sad is the fact that it was expected to happen. The race was there to jack up property prices on the area which is being developed by JP. Indian govt does not gain anything from it. So they are charging the tax which they are entitled to. JP is no longer interested to continue loosing more money as property prices have not gone up. The race was destined to end up like this.

    And politicians? What else can you expect from them. The priority projects change as soon as govt changes….

  16. “The impression is, once again, that India does not understand the value that such an event will give.”

    Does this imply that F1 wherever it goes, and its organisers, should be exempted from paying tax, purely because of the supposed (but ultmately intangible) “benefits” it brings? That seems to be the implication

  17. Thank you for sharing your views Joe.

    Enjoy the race.

    Do you expect to hear any further driver announcements or 2014 plans this weekend?

  18. Really can’t help wondering who’s being short-sighted on this one.

    I can accept that today F1 doesn’t need India, but the consensus that India is set to become an economic super-power in 25 years just leaves me thinking that pressing through the teething problems to set it as a “traditional” race will benefit F1 in the longer term.

    If F1 were entrenched enough in the national psyche of the Chinese and Indian people, every major car manufacturer would need to be in the sport, major sponsors would need to be involved.

    As it is, a car manufacturer is probably better off tying up a sponsorship deal with a major football club than with a motorsports outfit, because their penetration into the Asian markets is much better.

    Hence Chevrolet throwing a “horse-choking wedge of wonga” at Manchester United.

  19. This was a bad business decision by JP to build a F1 track in India.

    1. When has Indian customs been easy? Even the broadcast equipment brought in every few months for covering cricket matches pass through the same customs. They don’t complain because there is a killing to be made from TV rights for cricket in India unlike hosting an F1.
    2. How many Indians would spend average Rs 5000/- (mid level ticket) to watch F1 year on year? What about the cost of travel to New Delhi from various parts of India? How many would do that year on year?
    3. The track is built in the middle of no where surrounded by huge tracks of land belonging to JP who suspected they can make a killing of the real estate.
    4. How did JP expect to breakeven investing $400 million on a track for a single high profile event a year. It is common these days for high profile cricket matches and IPL matches not be have full capacity crowds.
    5. Many state governments impose entertainment tax on IPL matches. So why should F1 be any different?

    The deal between JP and FIA is between 2 private businesses. JP have made a wrong business decision bringing F1 to India and are now conveniently blaming the Govt and bureaucracy. Expecting Govt of India or the state government to bend over kneels and subsidise the business is illegal and immortal given there are other pressing needs in India.

    PS:
    1. I am F1 enthusiast since 2002.
    2. I have traveled from my home town Bangalore to watch the inaugural Indian grandprix.
    3. I have traveled to Singapore to watch the 2010 Singapore grandprix.

  20. Sounds as though the F1 community is glad to see the back of this event for the time being, at least until the bureaucratic hurdles are eliminated.

  21. This whole mess sounds eerily familiar to another Asian country’s inability to fully grasp the responsibility of hosting an F1 event.
    I think F1 will stay away from poorer countries for a while.

  22. Ah India… its greatest hero, the father of the nation, advocated a return to pre-industrialization and idealised poverty and a social system which dictates that some are immutably evil. Whoops!

  23. That was 60 years ago. And all the industry was in british hands. He only wanted people to be self-reliant and stop them paying britishers for imported goods. And he did not idealize poverty, he only said live modestly and within your means. Nothing wrong with that. A lot of counties can learn from that even today.
    IMHO, your input is irrelevant to the point being discussed. 60 years old idealogy of a colony does not apply to an independent country in modern times.

    1. Almost none of the industry was in British hands. He idealised beggars, that’s for sure, and he thought poverty was the way to spiritual fulfilment. Not alone in that, of course. What makes you think that anything has changed in modern times? India is still a colony, just now the masters come from closer to home, i.e. Uttar Pradesh. Southern Indians would rather speak English than Hindi.

  24. I think that the penny will eventually drop that at least at this moment India needs F1 more than F1 needs India. There would appear to be lots of competition for F1 races currently so it is up to the “powers that be” in India to smooth out the probems that inhibit an Indian F1 race taking place. The fact is that India is an emerging economy (understatement) with an rapidly increasing middle class that has an afinity with premium cars and F1 so it is in everyones interest to sort out the problems asap. A few years break will concentrate many minds with authority and influence to getting the job done.

  25. “F1 is not for you” was the scene a few years ago at Silverstone. And that being the classic ‘original’ birthplace of Grand Prix [French word?]. Considering it’s only our third ever event theres bound to be the negative press and govt. whatnot. I don’t think that’s worrying considering that Stefano Domenicalli was a 100% sure Ferrari had no issues with red tape at any level in India [read: FIA Team Principals Press Conference transcript]. Ross Brawn, Christian Horner and the rest even nodded in agreement with him. Understandably certain Brit journos are a bit envious of Sebastian Vettel’s crowning [read doughnuts!] at this ‘undeserving’ venue…I mean are we ever gonna see a driver celebrate anything in Silverstone? Too bad they can’t play host towards the end of the season…in the cold. 🙂

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