Cars may cost more starting January 1 with the government understood to have decided not to extend excise duty concessions on automobiles and consumer durables.
Duty concessions of two to six percentage points were granted in February by the UPA government to boost sluggish sales. These were extended by the Narendra Modi government in June, and are set to lapse on December 31. Both industries have been urging that the concessions be extended.
But a senior finance ministry official said, “The government is not extending the excise duty concessions on the auto sector and consumer durables.” Calls to Kaushal Srivastava, chairman of the Central Board of Excise and Customs, remained unanswered.
Auto-makers, who are awaiting a formal communication, expressed surprise at the news. Tata Motors chief Mayank Pareek said: “The decision to withdraw excise duty benefit, if true, is shocking and unexpected. Discounts are already high and increase in duties would mean higher prices.”
Maruti Suzuki executive director (marketing and sales) RS Kalsi said: “Most auto companies have announced a price hike from January 1 due to input costs. Price increases due to higher excise duty will be over and above that. This will clearly not be good news for the auto industry.”
After two successive years of sales slump, the auto industry had shown growth of 10.01% in April-November period this fiscal.