Khattar averse to cut in excise duty on cars

With the Union Budget nearing, excise duty on cars is back as a topic of debate.

Maruti Udyog Managing Director Jagdish Khattar said today that any further reduction in the excise on small cars would be irrational. The heavy industries ministry, on its part, is said to be in favour of a proposal to relax the criteria defining small cars.

In the last budget, the excise on small cars "� defined as those not exceeding 400 cm in length and 1,200 cc in engine displacement if petrol-driven and 1,500 cc if running on diesel "� was brought down from 24 per cent to 16 per cent.

The cars bigger in size or fitted with bigger engines continue to attract excise at 24 per cent. Incidentally, two-wheelers too attract excise at a rate of 16 per cent.

"The excise on small cars cannot be less than that on two-wheelers," said Khattar. Maruti is the country's largest car company that benefited the most from the excise reduction as it has the largest number of models that qualify for the lower rate.

If the definition of a small car is relaxed, some more, while not all, cars can qualify for the lower excise.

Before the last budget, the heavy industries ministry was in favour of reducing the excise on all cars, not just the small ones.

However, the government justified its move by talking about a vision to make India a hub for manufacture of small cars by giving incentive to their manufacturers.