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Auto industry seeks tax cuts in Budget for growth
India's $14 bn vehicle industry has asked the Govt to cut excise duty on cars and utility vehicles to boost demand and bring down tariffs on key raw materials to reduce costs.
India's $14 billion vehicle industry has asked the Government to cut excise duty on cars and utility vehicles in the July 8 Union Budget to boost demand and bring down tariffs on key raw materials to reduce costs.
The Society of Indian Automobile Manufacturers (SIAM), that represents 35 local and foreign vehicle makers in the country, said in a memorandum the Government should reduce production tax on cars and utility vehicles to 16 per cent from 24 per cent.
Taxes and duties make up nearly 40 per cent of the sticker price of a car in India and a cut in production tax or excise duty will help boost demand in a price sensitive market.
Only eight of every 1,000 citizens own cars in India, compared with 35 in Thailand and 450 in the developed world.
SIAM said utility vehicles are an important mode of mass transport in rural India due to poor road infrastructure and inadequate public transport and would benefit from a tax cut.
India's last Budget in February 2003 cut production tax on cars and utility vehicles to 24 per cent from 32, which helped left domestic car and utility vehicle sales by 27.4 per cent in 2003-04.
SIAM said tariffs on some industry raw materials like specific grades of cold rolled sheets, hot rolled steel and alloy steel, that are not available in India, should be cut to 10 per cent from 15, to reduce costs and boost industry growth.
India, emerging as a leading maker of mini cars, is already the world's second-biggest maker of motorcycles, the fifth largest maker of trucks and buses and is also making a mark as a producer of low-cost, high quality auto parts.
The country's combined sales of cars, vans and utility vehicles crossed a million in 2003-04, helping it join an elite group of countries with sales of over a million vehicles a year.
SIAM has also asked the Government to introduce an incentive scheme to retire older, polluting vehicles in India's seven biggest cities to help combat deteriorating air quality. This should be extended to all cities over the next three to five years.
Commercial vehicles older than 10 years and private vehicles older than 15 years should be retired, the industry body said.
