Ministry wants the lower excise duty benefits for the auto industry to continue

The auto industry wants the government to extend the reduced excise rate. The prices of automobiles and consumer durables had gone up after the government decided not to extend the reduced excise duty rates provided to these sectors beyond December 31 last year.

The Dollar Business Bureau AutoIndustry The Heavy Industries and Public Enterprises Ministry wants restoration of lower excise duty benefits to the Automobile Industry that had been withdrawn at the end of December. Anant Geete, Minister of Heavy Industries and Public Enterprises said, "We have suggested for the continuation (of reduced excise rates)." The previous UPA government, in order to boost the two sectors that were struggling in the wake of economic downturn, had cut excise duty on cars, SUVs, two-wheelers and consumer durables in the interim Budget in February. Excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8% from 12% previously. For SUVs, it was cut to 24% from 30%; for mid-sized cars to 20% from 24% and to 24% for large cars from 27%. In June, the new government led by Prime Minister Narendra Modi extended the excise duty concessions by 6 months to December 31. Now, the excise duties are back to the rates that existed before February 2014. The withdrawal of excise duty had an impact on sales in January with main players Maruti Suzuki and Hyundai posting single digit growth in January, while others like GM India and Ford and Mahindra and Mahindra saw decline in sales. Tata Motors, Toyota and Honda Cars India were, however, exceptions posting healthy double-digit growth rates during the month.