Budget 2014 - Small Cars, SUVs, Bikes Cheaper Through Excise Cut

The Finance Minister P Chidambaram has brought relief to the struggling Indian automobile industry by reversing the excise duty hike, introduced during the Union Budget 2013-14, to a large extent.

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"To give relief to the automobile industry, which is registering unprecedented negative growth, I propose to reduce excise duty," Mr. Chidambaram stated.

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The interim budget 2014 has seen excise duty of passenger vehicle being slashed across all segments, as well as those of two wheelers. The changes in excise duty are as follows:

Motorcycles, scooters & small cars: Down from 12 percent to 8 percent

Medium sized cars: Down from 24 percent to 20 percent

Large Cars: Down from 27 percent to 24 percent and

Sport Utility Vehicles: Down from 30 percent to 24 percent

The excise duty cut announced in this session of the interim budget will be in effect till June 20, 2014.

At the start of this year every Indian car manufacturer had hiked prices citing increased production cost, which dropped sales further. The excise relief announced today should prompt automakers to revise prices once again.

"Mr. Vikram Kirloskar, President, SIAM has welcomed the announcements made by the Finance Minister in the Vote on Account presented today. SIAM would like to thank the Finance Minister for recognizing the need for a more moderate tax structure for the automotive industry and for accepting SIAM's tax related recommendations, he said.

"We believe that this reduction in Excise Duty would reduce the acquisition price thereby making vehicles more affordable which would improve the consumer sentiment and hopefully revive the demand for vehicles," Mr. Kirloskar added.

"The Automotive industry is the engine of growth for the manufacturing sector as a whole as it supports key industries like auto-components, capital goods, raw materials, electronics, chemicals, plastics, software etc. Revived growth in the automotive industry would have significant positive impact on these key downstream and upstream manufacturing sectors that largely depend on the performance of the auto sector. This could hopefully herald a revival of the manufacturing sector in the days to come," Mr. Kirloskar said.