Finance Minister P. Chidambaram has proclaimed reduction in excise duty for SUVs, small cars, scooter and motorcycles. It came on Monday in the parliament during the final interim budget of the UPA-II. It is considered to be a big relief for the ailing Indian auto sector. The manufacturers were forced to increase their product prices, when the excise duty was revised back in 2013. Now, the prices of the vehicles falling in the aforementioned categories will have a lower price tag comparatively.
2013 proved to be the worst year for the Indian auto sector in last several decades, courtesy the inflating economy. The rising fuel prices and higher interest rates has caused 2014 to bring the price hammer down. However, this decrease in the excise rates will definitely help the manufacturers gain what is lost, at least till June 20, 2014!
Excise duty for small cars (under 4m), which have the largest share in sales, is now, 8% instead of the former 12%. Big relief for SUV lovers, the excise duty has been reduced from 30% to 24%. Some of our Indian utility and SUV manufacturers like M&M and Tata, will definitely draw profit from it after the doomed 2013. It will also aid the compact car makers like Maruti, Hyundai, GM and others who are in the segment of hatchbacks, compact sedans and compact SUVs, all under 4m.
Excise duty on medium cars is to roll down to 20% from 24%, while the larger cars attract an excise duty of 24% as compared with 27% earlier. The excise duty on two-wheelers now stands at 8%, which earlier was 12%.
The annual auto sales last year dipped to 9.59%, courtesy the lack of demand due to economic slowdown. According to the SIAM (Society of Indian Automobile Manufacturers), sales of the domestic cars fell to 18,07,011 units from 19,98,703 units recorded in 2012. According to R.C. Bhargava, Chairman, Maruti Suzuki India, the government should retain the cut in the excise duty for at least a year to witness a growth of 12-15 percent
Source : CarDekho - Chidambaram slashes excise duty, cars to get cheaper!