2012 Union Budget-Points That affect Auto Industry

Published: Friday, March 16, 2012, 13:29 [IST]

The budget for the financial year 2012-13 has been presented by the finance minister Pranab Mukherjee. The minister touched upon several points that will either have a direct or indirect impact on the auto industry. Drivespark presents to you some of the notable aspects of the union budget of 2012-13.

The most notable aspect of this year's budget was the increase in excise duty on large cars. The government has proposed to increase excise duty by two per cent from the current 22% to 27%.

Hybrid cars can now be cheaper to buy in our country as the import duty on lithium ion batteries, used extensively in hybrid cars, has been reduced. But the fact that there are not too many hybric cars around us makes this point quite insignificant.

But the most significant aspect of the budget is the minister's proposal to increase excise duty on small cars from the present 10 per cent to 12 per cent. India being a predominantly small car market, this point will have a huge impact on the auto industry.

Most carmakers had increased prices in January due to increased manufacturing costs. People ignored the price hike in February and sales increased at record levels as many feared an increase in excise duty on cars. Their fears have come true now and buying a car will be a pricey affair from now on.

One consolation for the car buyer is that the finance minister has not imposed any additional duty on diesel cars as many had feared. In fact people had expected a Rs.80,000 additional tax on diesel cars that would have increased diesel car prices by as much as 20 per cent.

Excise duty on imported cars has been increased from 60 per cent to 75 per cent

Cycles will be costlier too as custom duty has been increased to 30 per cent.