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Amber signal for auto cos

The domestic automotive industry hardly got a mention in this year’s Budget barring a token Rs 5,000 reduction in excise duties of premium cars and sports utility vehicles.

autos Updated: Jul 07, 2009 00:47 IST
HT Correspondent

The domestic automotive industry hardly got a mention in this year’s Budget barring a token Rs 5,000 reduction in excise duties of premium cars and sports utility vehicles.

After getting dollops of excise cuts in successive Budgets in the last three years, there was little scope for further incentives for the sector.

“A specific component was added to the ad valorem duty of 24 per cent applicable to large cars and utility vehicles in June last year. In the case of vehicles of engine capacity below 2000 cc, this component was Rs 15,000 per unit while for vehicles of higher engine capacity it was Rs 20,000 per unit,” said Finance Minister Pranab Mukherjee in his Budget speech.

“These rates are now being unified at the lower level of Rs 15,000 per unit,” the minister added.

Though carmakers were hoping for some incentives, the industry is putting a brave front.

“We are happy that the excise duties have been left unchanged as the industry is still witnessing marginal growth and is not out of the woods yet,” said R.C. Bhargava, chairman, Maruti Suzuki India Ltd.

“The real concern is of higher fiscal deficit which has the potential of increasing interest rates in the future. There could have been no real reduction in excise duties.”

Industry body Society of Indian Automobile Manufacturers (SIAM) admitted that though the scope was limited, the commercial vehicle segment needed more impetus beyond the 12 per cent reduction in excise duty for petrol driven trucks.

“Investment in infrastructure is what the country needs and all this will have a positive impact on us as well,” said Dilip Chenoy, Director General, SIAM.

“The commercial vehicle sector however is still struggling and needs some more help to tide over the current crisis.”