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Manufacturers Want Excise Duty Cut To Continue
The UPA government, before it exited, had introduced a temporary cut in Excise Duties. The previous government was offering a cut in excise duty only till the 30th of June, 2014. With only seven days remaining for the deadline, it is unclear if the Narendra Modi government will continue the benefit or not.
Most manufacturers were offering the deduction in excise duty as a benefit to its customers with price discounts. Very few manufacturers did not offer the benefit to its customers as they believed they would make profits, if they maintained its prices.
Automobile manufacturers are making it evident to the current government that the cut in excise duty should continue. The manufacturers believe this is the only way that the customers will be satisfied and could spur growth. The budget is scheduled to be tabled next month and manufacturers will be waiting eagerly.
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The Indian auto industry fell down by 6.69% in terms of sales in 2012-2013 fiscal year. This was the first decline in auto industry in over a decade. In fiscal year 2013-2014 the auto sector again witnessed a decline of 4.65%. With the excise duties set to go back to its normal rates by 30th June, 2014 manufacturers are worried about the future of sales.
In a budget that was presented in February, 2014, the government had opted to reduce excise duty on commercial vehicles, small cars, scooter and motorcycles. It earlier attracted 12%, which was reduced to 8%. SUVs witnessed a reduction from 30% to 24%, while large car excise duty was reduced to 24% from 27%. Mid-sized vehicles also benefitted by the budget and witnessed a reduction by 20% from 24%.
Automobile manufacturers are expecting the issue will be resolved prior to 30th June, 2014. Most manufactures will wait also for the budget which is a month away before restructuring the prices of its vehicles. We hope the government takes a positive step in relation to the progress of automobiles in India.
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