Auto industry body wants excise duty reduction in Budget

SIAM said excise duty must be lowered keeping in mind the roadmap for GST implementation

Automobile industry body SIAM wants Finance Minister Arun Jaitley to reduce excise duty on automobiles in the upcoming Budget to help the sector combat demand slowdown.

Besides, measures towards restarting stalled infra projects to help revive demand particularly of commercial vehicles should also be put high on the agenda, SIAM feels.

"We expect reduction of excise duties on automobiles, which is required considering market conditions and demand now," Society of Indian Automobile Manufacturers Deputy Director General Sugato Sen told PTI.

Budget 2015: Complete Coverage

Sales of passenger vehicles in the domestic market grew by just 3.67 per cent in the April-December period this fiscal at 18,94,932 units as against 18,27,866 units in year-ago period.

Sen said that apart from the need to support the auto sector, excise duty must be lowered keeping in mind the roadmap for GST implementation.

In the interim Budget last February, the previous UPA government had cut excise duty on cars, SUVs, two-wheelers and consumer durables in order to boost the two sectors that were struggling due to economic downturn.

Excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 per cent from 12 per cent previously. For SUVs, it was cut to 24 per cent from 30 per cent; for mid-sized cars, to 20 per cent from 24 per cent and to 24 per cent for large cars from 27 per cent.

Budget 2015: Complete Coverage

For the consumer durables sector the excise duty was reduced to 10 per cent from 12 per cent.

In June, the new government led by Prime Minister Narendra Modi extended the excise duty concessions by six months to December 31, 2014. The auto industry wanted further extension of the duty relaxation, but the NDA government decided against it.

Subsequently, with excise duty back on pre-February 2014 levels, auto manufacturers hiked prices of vehicles.

Sen also said there must be steps in the Budget for fleet modernisation and "incentives must be given for replacing 15-year-old vehicles" to encourage replacement.

"We also hope the vehicle depreciation rate must be increased to 25 per cent from 15 per cent currently," he added.

Budget 2015: Complete Coverage