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Hailing the announcement of excise duty reduction for automobile sector, Commerce Minister Anand Sharma and Heavy Industries Minister Praful Patel on Monday said the move would boost the growth of the sagging industry and generate employment.
"The interim budget has very firmly underscored government's priority, attention and commitment to promote manufacturing and job creation. I hope that automobile and capital goods (growth) will pick up with the announcements made in the Budget," Sharma told reporters in New Delhi.
Sharing similar views, Patel said it would encourage both rural and urban mobility which is a pre-requisite for economic growth.
"It would encourage market demand which would, in turn, result in creating more jobs in the manufacturing sector," the Heavy industries and public enterprises minister said.
Looking at the downward trend in the auto and capital goods industry in the current financial year, Patel has earlier written to the Finance Minister to cut the excise duty on commercial vehicles.
Prices of automobiles, including cars, sports utility vehicles and two-wheelers, are set to come down with Finance Minister P Chidambaram announcing a reduction in excise duty in the Interim Budget.
Excise duty for small cars, scooters, motorcycles and commercial vehicles will come down to 8 per cent from 12 per cent earlier. SUVs will attract excise duty of 24 per cent as against 30 per cent earlier.
Excise duty on large cars will now be 24 per cent compared with 27 per cent earlier, while the duty on mid-sized cars will go down to 20 per cent from 24 per cent previously.
The excise duty cut will be applicable up to June 20, 2014.
Annual car sales in India declined for the first time in 11 years in 2013, posting a 9.59 per cent dip, as the auto industry reeled under a prolonged demand slump due to the economic slowdown.
According to the Society of Indian Automobile Manufacturers, domestic car sales last year fell to 18,07,011 units from 19,98,703 units in the previous year.
The slump in sales continued in January as car sales fell for the fourth straight month with a decline of 7.59 per cent to 1,60,289 units from a year earlier.
Further, Sharma did not see any link between the budget and the coming general elections saying ‘interim Budget is a constitutional necessity and thats exactly we are doing and I do hope that this will instill confidence’.