Shares in Indian vehicle makers rose on Friday after the government cut down the excise duties in the fiscal year 2008/09. Reduce in excise duty will also encourage the demand for small cars.
The auto sector too has seen some positives interms of an excise duty cut on buses and chassis from 16% to 12% and from 16% to 12% on 2-wheeler and small cars.
S Sandilya, Chairman at Eicher Motors feels that these duty reductions would definitely provide a boost to industry: "I think the duty reduction on two-wheelers and buses is a very positive move. In the case of cars, we did anticipate that large cars would get a reduction from 24% to 16%, but the fact that these small cars have been given the benefit is definitely a positive move."
Excise duties on hybrid cars have also been reduced by 14 percent to 24 percent and on two- and three-wheelers to 16 percent from 24 percent.
Reduce in the excise duty will boost the two-wheeler industry, especially the small car sector.
Maruti Suzuki India Ltd., its shares rose as much as 3.8 percent to 867 rupees. As there is reduction in the excise duty the company is also planning to cut down the rates of some models to pass on the tax benefit to consumers.
Hero Honda Motors Ltd shares also rose as much as 1.7 percent to 760 rupees.
The second largest bike maker and top three-wheeler maker Bajaj Auto’s shares also increased 4.5 percent to 2,319 rupees.
Shares in Ashok Leyland Ltd, the second largest bus and truck maker’s shares increased by 4 percent to 37.40 rupees.
The sector index also increased by 1.9 percent to 4,920.39 before falling in Mumbai market that was down by 2 percent to 17,466.72 points at 0848 GMT.
Some auto makers like the General Motors were disappointed as they expected the reduction in the excise duties for all cars.
