Hyundai Motor India Ltd )HMIL), the Indian arm of the South Korean automobile giant is furious with the new Automotive Mission Plan's definition of a 'small car'.
A small car has been defined as one whose maximum length can be 3.8 metres. Hyundai's premium car in this segment Getz is 38.1 metres long, thus ruling it out of this category.
Small cars attract 16 per cent excise duty, while cars in all other categories must pay 24 per cent excise. Getz's price is bound to rise, if the definition is accepted.
In the last budget, Finance Minister P Chidambaram had clearly laid down specifications of what constituted a small car: maximum length 4 metres, maximum engine capacity 1.2 litres for petrol and 1.5 litres for diesel. There is no clear explanation for why the change was made.
Speaking to newsmen immediately after the release of the AMP, HMIL managing director HS Lheem said he would be meeting Santosh Mohan Dev, Minister for Heavy Industries, next week. "I will mention the lack of a consistent policy on small cars to him," he said.
Modifying Getz's size to fit the new definition will be a tall order. "We will have to modify all components for the existing cars,” he stressed. "The government should have a consistent policy," he added.
"We are ready to follow all government regulations. But new regulation calls for changes, and it takes two years to make adjustments."
Referring to his meeting with Prime Minister earlier in the day, Lheem said he sought support for vehicle export and making India the hub for small car exports. “There is a need for strong policy initiatives to boost exports," he added.