Automotive sector seems to have one good reason to cheer about in this season. Finance Minister P Chidambaram has announced a reduction in excise duty in the 2014 Interim Budget. Slump in car sales was witnessed for the fourth time in a row last month at 7.59%. The slump noted is said to be the lowest one noted in past 11 years. As per the new excise duty regulations, Small cars, two wheelers and commercial vehicles shall come down to 8% from previous 12% that was payable till date. SUV segment is liable for 24% excise duty as against 30% that was payable earlier.
P Chidambaram, said, “To give relief to the automobile industry, which is registering unprecedented negative growth, I propose to reduce excise duty.” As per a recent report released by Society of Indian Automobile Manufacturers, domestic car sales last year fell to 18,07,011 units as against 19,98,703 units noted in the previous year. Mahindra and Mahindra seems to particularly relieved by this decision and has decided to bring discounts of up to Rs. 40000 from their SUV line. Pawan Goenka,President of the Automotive and Farm Equipment sectors, Mahindra and Mahindra said in an interview with CNBC-TV18, “The Auto expo and now the excise duty cut in the budget are the two triggers that were needed to spur demand.”
The loss in sales in 2013 is said to be the lowest one recorded in past 11 years. The fall noted was nearly 9.59%. As per the Interim Budget 2014 the cut in excise duty shall be valid up to June 20, 2014. Excise duty on mid-sized cars will go down to 20% as against 24% noted in the previous year. Industry experts believe that the relief may be short lived as excise duty cuts spell huge source of revenue loss for the government as things may change post June 2014 when new government comes in power.
