Formula 1's exit from India was not due to a lack of enthusiasm or fans, nor was it because of poor infrastructure. In fact, the Indian Grand Prix held at the Buddh International Circuit was met with excitement and large crowds, with nearly 90,000 fans gathering to watch global racing legends like Sebastian Vettel, Lewis Hamilton, and Michael Schumacher tear through the tracks. The event symbolized India’s grand entrance onto the international F1 scene and gave people hope that it would remain a regular feature on the F1 calendar. However, despite the overwhelming support and infrastructure readiness, F1 came to a halt in India rather abruptly. There was no formal goodbye, no final race to mark its end—it simply disappeared. The real reasons behind this exit were rooted in complex policy challenges, taxation issues, and a failure to recognize F1 as a legitimate sport under Indian law, rather than the excitement level or popularity of the event.
Hosting a Formula 1 event is extremely expensive, not only in terms of constructing the racetrack but also in maintaining and managing the large-scale logistics required for such a high-profile international event. Building a Formula 1-compliant circuit like the Buddh International Circuit costs hundreds of millions of dollars. But that’s just the tip of the iceberg. Every race weekend incurs huge operational expenses—ranging from high-end pit facilities and hospitality lounges to world-class media centres, security arrangements, marketing activities, and even road infrastructure upgrades. Overall, putting together a Formula 1 weekend in India costs anywhere between Rs 500 crore to Rs 1,250 crore. In most other countries, such financial pressure is lightened through support from either national or regional governments, often in the form of subsidies or direct participation. But in India, this vital government backing was largely absent, leaving private organisers like Jaypee Sports International to shoulder most of the costs on their own. This lack of public-sector support made it increasingly hard to sustain the event over the long term.
The tax policy around Formula 1 in India was perhaps the most damaging issue of all. Instead of recognizing it as a legitimate international sport, Indian tax authorities classified Formula 1 as an ‘entertainment’ event. This classification meant that it did not qualify for tax exemptions or other benefits that are typically available for sports events. As a result, organisers had to pay hefty entertainment taxes on ticket sales and were also subject to income taxes, pushing operational costs even higher. The Supreme Court of India, in 2011, further complicated matters by ordering the organisers to set aside entertainment tax revenue in a separate account even before the race could take place. Such financial restrictions created a massive burden and disincentivized future planning. The entertainment tax laws in Uttar Pradesh, where the race was held, didn’t list car racing as a sport. Instead, the law focused on traditional arts and cultural activities, leaving Formula 1 with no legal recognition as a sport and, consequently, no access to the supportive tax framework that other sports received.
This lack of recognition also meant there was no government aid for infrastructure development or administrative facilitation. Other global sporting events held in India, like the Commonwealth Games, benefited from such support, which made their operations more sustainable and efficient. F1, on the other hand, operated in a policy vacuum. Since it was not seen as a sport, organisers missed out on grants, subsidies, and partnerships that might have helped ease the financial load. According to experts, this treatment was unfair and short-sighted. If Formula 1 had been treated like any other sport of international repute, it might have had the chance to thrive in India. But because it was labelled as entertainment, it was subject to higher taxes and more bureaucratic hurdles. Over time, the burden of these challenges proved too heavy, and with no long-term planning or encouragement from the government, the Indian Grand Prix came to an unfortunate and early end.
Now, with India operating under the Goods and Services Tax (GST) regime, the landscape has shifted significantly. The new tax structure has eliminated individual state-level entertainment taxes and replaced them with a unified national tax system. According to tax analysts, this could make a substantial difference if Formula 1 were to return to India. Under GST, the rates are more moderate, and organisers can benefit from input tax credits, which could help reduce the overall cost of hosting the event. Additionally, the GST system is considered more transparent and simpler to comply with, making it easier for international stakeholders to operate within the Indian market. This shift in taxation might offer a new window of opportunity for the revival of Formula 1 in India, provided there is a clear strategy and alignment among various government departments to support the event.
Despite the optimism surrounding GST, it’s important to understand that tax is only one part of the equation. The departure of F1 from India was also caused by fragmented decision-making, a lack of vision, and poor coordination between stakeholders. Bringing back Formula 1 will require more than just a friendly tax regime. It will need strong policy decisions, clear recognition of F1 as a sport, and proactive support from both central and state governments. With better planning, improved administrative support, and streamlined operations under GST, it is certainly possible for Formula 1 to make a triumphant return to India. However, until the nation’s policymakers commit to treating F1 as a serious sport worthy of long-term investment, the Buddh International Circuit will remain a silent monument to a dream unfulfilled.
