The Telegraph
Monday , May 26 , 2014
CIMA Gallary

Car makers want excise relief to stay

New Delhi, May 25: Car makers want the Narendra Modi government to continue with the sops on excise duty — or lower it further — as well as announce laws to phase out old trucks.

They are also in favour of general tax reforms such as the introduction of the goods and services tax (GST).

“We will send a pre-budget memorandum to the government in some time,” said Vishnu Mathur, director-general of the Society of Indian Automobile Manufacturers (Siam).

“Our main demand from the new government will be the continuance of excise duty cuts. It has helped the sector to reduce losses,” said Mathur.

In the interim budget this year, finance minister P. Chidambaram had cut the excise duty on small cars, motorcycles, scooters and commercial vehicles to eight per cent from 12 per cent. He had also announced reduction in excise duties on sports utility vehicles to 24 per cent from 30 per cent, large-segment cars to 24 per cent from 27 per cent and mid-segment cars to 20 per cent from 24 per cent.

According to Mathur, the government should come out with its policy on fleet modernisation to help the commercial vehicles segment, which witnessed a 24 per cent decline in sales in April to 43,080 units.

“The heavy industry ministry is already working on finalising the policy on fleet modernisation. We hope it happens soon as it will give an immense boost to the segment,” he said.

In a presentation for the ministry last year, Siam had said customers would receive concessions of up to Rs 1 lakh in taxes if they sold commercial vehicles older than 15 years.

Hobbled by the slow growth in the past two years, car makers hope the upcoming budget would revive the industry and spur demand.

Despite a cut in prices, sales dipped 10 per cent in April, the biggest monthly fall in a year, as negative sentiments surrounding the economy continued to trouble consumers. The decline was the steepest since a 12-per-cent drop in May last year. Ten of the 14 car makers reported lower sales, according to the data released by Siam.

The industry also hopes the Narendra Modi government will cut down on red tape and push for speedy clearances.

“For us setting up the plant in Gujarat has been relatively uncomplicated as the state government works quite efficiently. I hope the new government does the same all over the country,” said R.C. Bhargava, chairman of Maruti Suzuki India Limited.

Car makers will also demand quick implementation of the GST.

“(We hope the government will) introduce GST as it has been long pending. This single reform has the potential to revolutionise the entire manufacturing sector by eliminating the cascading effect of taxation and can overnight make Indian products cost competitive,” said Harish Lakshman, president of the Automotive Component Manufacturers Association.

In its first 100 days, the industry wants the government to focus on infrastructure, manufacturing and power.