Auto parts makers in Punjab and Haryana today welcomed the excise duty cut on two-wheelers and cars, saying this would provide an impetus to the component sector, which is hit by slump in demand.
Terming the excise duty cut as major relief, industry representatives said that it would boost the demand for cars and two-wheelers which will in turn push the orders size, which has seen a cut by up to 30 per cent in last one year.
Car sales had dropped with a decline of over 7 per cent in January this year due to sluggish demand.
Finance Minister P Chidambaram in the interim budget yesterday announced excise duty cut to 8 per cent from 12 per cent for small cars, scooters, motorcycles and commercial vehicles; 24 per cent from 30 per cent for SUVs; 20 per cent for mid-sized car from 24 per cent and 24 per cent for large cars from 27 per cent.
"It (the duty cut) is certainly going to be a big boost for auto component makers. Auto component makers have seen big cuts in size of orders because of sluggish demand in the automobile sector. The size of orders was down in the range of 10-30 per cent with maximum impact being seen on orders of commercial vehicles," Ludhiana-based auto component maker New Swan Group's MD Upkar Singh said today.
New Swan Group supplies transmission components and body chassis parts to Maruti Suzuki, TVS, Swaraj Mazda Ltd, Tata, Hero MotoCorp.
"This announcement will arrest the trend of declining size of orders for small and medium scale of auto part makers in Haryana, which is a major hub of auto parts for both cars and two-wheelers," said Gurgaon-based industrialist Parveen Yadav.
Auto ancillary units in Punjab and Haryana supply components to almost all major auto, two-wheeler and commercial makers.