Auto industry pitches for continuation of excise duty relief

Car makers have asked the government to extend excise duty relief, which is ending on December 31, saying removal of this incentive could push the industry into a negative territory.

The government had cut excise duty on cars, SUVs and two-wheelers in the Interim Budget in February to help the industry tide over a demand slump.

In June, the new government extended the excise duty concession for automobiles by six months to December 31.

"I had welcomed the government's move when they had announced to maintain the reduction in excise duty six month's back and I think the government should continue to do so going forward as well," Renault India Country CEO and Managing Director Sumit Sawhney told PTI.

Maruti Suzuki Chairman R C Bhargava said: "At this point, if the excise duty goes up, it could easily push the car industry into the negative territory."

He expressed the hope that government will continue excise relief and said it is very conscious of the need to expand manufacturing and that the car industry has not been performing as good as it was hoped for.

Industry body Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said the continuation of the excise duty relief would help the industry recover fully.

"We are requesting the government to continue the excise duty reduction as the industry has not fully recovered. Continuation of excise duty relief will help the recovery of the industry," he said.

Car sales in India fell 2.55% in October as purchases remained subdued during the festival season, marking the second consecutive month of decline. In September car sales had declined 1.03%, after posting four months of consecutive growth.

Excise duty on small cars, scooters, motorcycles and commercial vehicles currently stands at 8% from 12% previously. The factory gate duty on SUVs stands at the reduced rate of 24% as against 30%.

The duty on large cars stands at 24% compared with 27% earlier, while the duty on mid-sized cars stands at 20% from 24%.

Sawhney said that the government should take a long term view and look at further reducing the excise duty.

"Taking a long term view the government has to have a unified excise duty structure and look forward to a further reduction in the excise duty, which is a long pending demand from all the manufacturers," he said.