Auto-industry seeks another booster
With the two stimulus packages having only a moderate impact on consumer demand for automobiles, the industry is looking for another booster from the government in the Union budget.autos Updated: Jun 16, 2009 21:23 IST
With the two stimulus packages having only a moderate impact on consumer demand for automobiles, the industry is looking for another booster from the government in the Union budget.
Topping the list of demands is rationalisation of excise duties for cars which currently is biased towards small cars. The government had reduced excise duties on cars smaller than 4 metres to 8 per cent; duty on bigger cars is 20 per cent.
The industry's apex body Society of Indian Automobile Manufacturers (SIAM) has maintained that there should be uniformity of taxation across all segments.
"The excise duty on big cars is now more than double that on small cars — not to mention the specific duty that was announced on top of it last year," said a SIAM official. "We have maintained that the duty needs to be uniform."
With a majority of the ills of the sector also connected to the difficult financial situation, car and bike manufacturers are holding out hopes on some incentives on that front.
"I expect the government will do something to improve financing of new cars and bikes," said Michael Boneham, president and Managing Director, Ford India. "The biggest problem that has been plaguing us is the reluctance of banks in financing and I am quite certain that is an area that will be addressed."
Despite the mid year slump, car and two wheeler sales recovered in 2008-09 to end in the positive terrain. But its the commercial vehicle segment that needs urgent attention with sales continuing to fall in double digits.
“The impact of higher depreciation on commercial vehicles has only been marginal so far so there is scope for more action there,” said Kumar Kandaswami, senior director, Deloitte. “Commercial vehicles segment has by far been the worst hit largely because it is not entirely sectoral but driven by the overall economic sentiment in the