Car firms seek excise cut across all segments

The automobile industry will urge the finance ministry to extend the 16 per cent excise duty, announced in the Budget 2006-07, across all car segments, including multi-utility vehicles.

The executive committee under the Society of Indian Automobile Manufacturers (SIAM) has framed a four-point agenda, to be taken up before the ministry.

The Budget had given a concessional duty of 16 per cent to small cars with engine capacity less than 1200 cc (petrol engine) and less than 1400 cc (diesel engine) measuring not more than 4 meters in length. The other models would, however, continue to attract 24 per cent excise duty.

The memorandum, which SIAM will place before finance minister, P Chidambaram, has also sought an increase in customs duty on commercial vehicles.

The Budget had slashed this rate from 15 per cent to 12.5 per cent.

"Cars that have not been given concessional duty are those that have recorded a negative growth in 2005-06. The higher duty of 24 per cent on these models will only push its sales down further, affecting the tax revenues more," K K Swamy, chairman of SIAM Taxation Committee, said at the conclusion of the executive committee meeting in the capital today.

He further said that while in volume terms, small cars contribute 60 per cent of total sales, in value terms, bigger cars account for 60 per cent.

Though three members of SIAM, Maruti Udyog Ltd, Tata Motors and Hyundai Motor India, have benefited from the recent cut in excise duty on small cars, all SIAM members (including the three) have agreed on the need for a uniform tax regime for cars and have objected to the fragmentation of market through fiscal measures.