Excise cuts withdrawn, cars may cost more in 2015

The central government Tuesday decided not to extend the excise duty concessions provided to the auto sector in 2015, which may lead to cars getting expensive.

The Narendra Modi-led NDA government had in June extended the excise duty concessions of the previous UPA government by six months to Dec 31, but they will not be extended further, a finance ministry source told IANS.

In order to boost the auto sector, excise duty was reduced to 24 percent from 30 percent for SUVs, 20 percent for the mid-sized segment from 24 percent, and 24 percent for large cars from 27 percent.

This, combined with the effect of cuts in fuel prices, led to 9.5 percent spurt in November car sales at 1,56,445 units, up compared to 1,42,849 units in the same month of 2013, according to the Society of Indian Automobile Manufacturers (SIAM).

Overall, the auto industry grew of 10.01 percent in the April-November period this fiscal at 13 million units, as against 12 million in the same period a year ago, following two successive years of slump.

Car manufacturers have been asking the government to extend excise duty relief, saying withdrawal of the incentive could push automobile prices up further next year.