Calcutta, March 23: Car makers want the reduction in excise duty to be in place for some more time to overcome the decline in sales.
In the interim budget last month, finance minister P. Chidambaram had announced an excise duty cut on passenger cars, two-wheelers and utility vehicles to revive sales.
The duty cut ranged from 3-6 per cent across various segments.
For car buyers, the savings ranged from Rs 15,000 to over Rs 1 lakh across manufacturers and models. Companies rushed to pass on the benefit to buyers and sales improved marginally in February.
However, the rates will be subject to revision when the final budget is placed after the general elections. Automobile companies maintain that the excise duty should be kept at lower levels for at least a year to ensure an effective revival of the industry.
“We were frankly not expecting such a wide range of reduction in excise duty for the industry,” Pawan Goenka, executive director and president (automotive and farm equipment sectors) of Mahindra and Mahindra, told The Telegraph.
On whether the government should continue with the low rates, Goenka said, “It should depend on how the industry performs in the next few months after the announcement. If we see a significant turnaround, the reduction should continue at least till the end of the year.”
Sumeet Sawhney, CEO and managing director of Renault India, said the automobile industry played a key role in the manufacturing sector, which continued to remain under stress. While welcoming the reduction in duty, Sawhney said, “It would not be prudent for any government to reverse the decision.”
He added that there would not be any immediate impact in terms of an increase in sales because of high inflation, interest rates and fuel price.
“Any improvement will take some time,” he added.
Several car sales executives said there had been a rise in the number of enquiries as a result of lower duties.
EXCISE DUTY RELIEF
- Government cuts excise duties
on cars in interim budget
- Cost savings to buyers range
from Rs 15,000 to Rs 1 lakh
- Sales improve marginally
after tax relief
- Tax relief valid till general
budget after polls
- Industry wants the relief to
continue till the end of this year