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Auto sector expects Govt to continue with incentives

Auto companies are looking forward to the continuation of incentives, including excise duty cuts, given in the two stimulus packages in the Budget 2009-10.

india Updated: Jul 05, 2009 14:10 IST

Auto companies are looking forward to the continuation of incentives, including excise duty cuts, given in the two stimulus packages in the Budget 2009-10.

Major auto players are expecting that the government will continue with 4 per cent CENVAT cut and reduce excise duty further to 8 per cent from 10 per cent, as announced in the two stimulus packages in December and January.

"Availability of finance at reasonable cost is important for the industry, without which sales of vehicles can't be revived," Maruti Suzuki India Chairman R C Bhargava said.

On the commercial vehicle front, Bhargava said, "Better implementation of infrastructure will boost the sector. CV segment will grow if infrastructure projects like highways and power plants grow."

Continuation of the benefits in the two stimulus packages is important as the auto sector has not fully recovered and withdrawal of the incentives could even push the sales into negative territory, he added.

Bajaj Auto Chairman Rahul Bajaj said, "Export markets are severely hit due to global financial turmoil, so we need to improve the domestic demand... Banks should lend at reasonable rate to customers."

Country's largest exporter Hyundai Motor India spokesperson Rajiv Mitra said the government should provide sops to boost overseas sales. Besides, the company expects the government to remove differential excise duties for different sizes and class of cars.

General Motors India Vice-President P Balendran said his company would expect introduction of an uniform tax structure and said the additional excise duties of Rs 15,000 and Rs 20,000 on cars of 1500 cc and above should be removed.

He added excise duty on large cars should be brought down from 20 per cent and uniform taxes should be implemented, apart from encouraging production of electric and hybrid vehicle projects.

Automotive Components Manufacturers' Association (ACMA) Executive Director Vishnu Mathur said the priority should be to try to attract foreign investments into the country.

"There should be some incentives attracting FDI for the component sector. Because of high incentives provided by their governments, global component makers are going to many other countries in this region, like Thailand," he added.