The central government of India is planning to bring down the excise duty implied on small passenger cars from 12 per cent to 10 per cent in this year’s Union Budget. Reportedly, the decision will be taken somewhere in late February, which will possibly result to pace-up the sagging car sales. According to sources, the experts of auto industry have demanded a reduction in excise duty during the pre-budget consultations.
Speaking on this, a finance ministry official said, “Automobiles are an important sector. We are looking at providing excise duty cut to benefit passenger car buyers, as the industry has been demanding it for some time.”
It must be noted that in 2009 Union budget, the excise duty on small cars was slashed from 12 per cent to 8 per cent. However in last two years, the finance ministry extended it by 2 per cent in each year’s budget announcement. Industry experts believe that the small cars have been mainly driving sales in the Indian auto industry.
Besides, the finance ministry is also planning to impose additional tax and excise duty on the diesel cars. In order to discourage the sales of diesel models, the petroleum ministry has demanded the move, which will reduce the gap between the sales of both – petrol ands diesel models.
As per the apex auto industry body, Society of Indian Automobile Manufacturers (SIAM), the sales of cars are anticipated to increase by minute 2 per cent in the ongoing fiscal. The president of SIAM, S Sandilya said, “There is need to cut excise duty to push car sales. We have asked finance ministry to cut excise duty and have been promised action. Despite discounts and festive season, sales have not picked up. There is a need to attract small buyers.”
It must be noted that the passenger car sales between April and December 2012 witnessed a dip of 0.33 per cent, owing to increasing fuel prices and high interest rates. In order to boost up the sales and attract foreign auto companies, the finance ministry has to reduce the excise duty from small cars. Interestingly, Indian buyers have a penchant for small cars as they have compact dimensions and come at a reasonable price.
