Imported commercial vehicles are set to become more expensive, thanks to a rise in the rate of effective basic Customs duty - from 10 per cent to 20 per cent. The move is aimed at encouraging local manufacturing.
Swedish truck major Scania is the only company importing fully built trucks and buses in India. Most other major non-Indian entities like Volvo, MAN and Daimler have established manufacturing units here. The rate was raised to 40 per cent and then reduced to 20 per cent..
"We are doing about 40 per cent localisation on our products. About 10 per cent of the 600 units sold last year was fully imported. This year, it is going to be even fewer," said Scania India Managing Director Anders Grundstromer..
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Customs duty on commercial vehicles in completely-knocked-down (CKD) kits and electrically operated vehicles, including those in CKD condition, will continue to be 10 per cent.
Excise duty has been rounded off to 12.5 per cent from 12.36 per cent. This might lead to a minor increase in the prices of vehicles in this bracket, such as hatchbacks and compact sedans. The 0.14 per cent rise in excise might translate into about Rs 500 per vehicle; the manufacturers could either absorb this or pass on to buyers.
Auto makers, though disappointed that there was no reinstatement of excise duty concessions, say the finance minister's definitive timeline of April 1, 2016, for rollout of goods & services tax (GST) will likely drive down taxes.
The passenger vehicle industry reported 3.6 per cent sales growth in the April-January period to 2.12 million units, while the commercial vehicle segment saw a fall of 4.6 per cent to 497,000 units, according to SIAM data.
The Budget also proposed earmarking Rs 75 crore for faster adoption and manufacturing of electric vehicles in 2015-16.
Finance Minister Arun Jaitley proposed extending concessional Customs and excise duty rates on specified parts of electrically operated and hybrid vehicles to the end of 2015-16. Electric car maker Mahindra Reva and many other makers of battery operated two-wheelers will benefit from this.