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In order to push local manufacturing, Finance Minister Arun Jaitley today increased effective tariff rate on imported commercial vehicles from 10% to 20%, making the import of completely built units expensive.
"Tariff rate on commercial vehicles is increased from 10% to 40% and effective rate from 10% to 20%," he said while presenting the Budget for 2015-16 in the Lok Sabha.
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Reacting to the proposal, Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said the move would encourage local manufacturing of the vehicles.
"We welcome this move of the government to hike tariff duty on commercial vehicles from 10% to 20%. With hike in the tariff rate, import of completely built (CBUs) units of commercial vehicles, would become costly," Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur told PTI.
This is in line with the 'Make in India' initiative launched by the government and would encourage local manufacturing of commercial vehicles in the country, he added.
When contacted, a Tata Motors spokesperson said: "We do not see any impact on us as we have a completely local production. This move will facilitate the Make in India's efforts."
KPMG India's, Partner, Infrastructure and Government Services, Jaijit Bhattacharya said the tariff rate hike can can potentially be absorbed by truckers as the fuel costs have come down and the competing railways freight charges have gone up.
"However, in the long run, this increase is detrimental to the efficiency in the Indian economy as truckers form an important part of the supply chain," he added.