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Auto Industry Concerned By Anti-Auto Budget
Company bosses, including Ford, Audi, Mahindra & Mahindra have raised their concerns and fear the new announcements will further deteriorate an already weak automobile market in India. Besides the hike in excise duty the other thing that the industry is not pleased about is the new definition the budget has given to an SUV.
According to it any vehicle that has an engine larger than 1500cc and measures over 4000mm (4 meters) is an SUV. This means even sedans such as the SX4 and Civic are considered as SUVs, while a compact SUV such as the Quanto does not fall under the SUV category. Also, the reason given for increase of duty on SUV's is that they acquire more space, which M&M's Pawan Goenka says, should not be a parameter for hike.
Mr. Michael Perschke, Head, Audi India had this to say. "Increase in Custom Duty for imported cars and Excise Duty on SUVs is very surprising. It will severely impact the auto industry and its growth. We will have to seriously evaluate the impact of this hike on our prices and, have no choice other than to pass on the increase to the customer. Overall it will have an adverse impact on automobile industry which is already going through a slowdown and specifically affect demand including that of SUVs."
"Currently, the industry is facing pressure from a number of factors like increasing fuel prices, high input costs, persistent inflation, high interest rates; the increase in excise and customs duty will be a dampener. The government should have looked at extending support to auto industry, which has been contributing, significantly to the GDP and could have formed a strategic pillar of industrial development."
There was at least one part of the announcement that brought some smiles on the faces of auto honchos - the numerous infrastructure projects that were announced, including new road projects and infrastructure corridor.
"We are also happy about the Chennai - Bengaluru Industrial Corridor to be developed jointly by the Department of Industrial Policy and Promotion (DIPP) and the Japan International Cooperation Agency (JICA). This industrial corridor will play an important role in terms of logistics infrastructure for companies like ours which are present in the said region," said Mr Takayuki Ishida, MD & CEO, Nissan Motor India.
This sentiment was reflected in Mr. Michael Perschke's statement as well, who said, "We are happy to note that there is a renewed focus on infrastructure especially roads. The proposed regulatory authority on road construction will hopefully fuel better infrastructure and speed up developments."
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