The Budget this year may have slashed excise duty on "small" cars, two- and three-wheelers to 12 per cent but not many in the auto industry are celebrating. Budget 2008-09

While many car makers are peeved over "large" cars still being levied the highest 24 per cent duty, two-wheeler and three-wheeler makers want their vehicles to no longer be on a par with small cars and instead be brought into the 10 per cent excise bracket.

In its post-budget demands, the automobile industry has identified four areas of concern.

To begin with, excise duty on cars longer than 4 metres and with engine displacements of either over 1200cc (petrol) or 1500cc (diesel) ought to come down, since the current duty of 24 per cent is the highest for any product in the country.

Though many large carmakers have either already joined the small-car bandwagon (for example General Motors with its Spark and Aveo UVA) or are planning to enter this segment (Honda, Toyota and Ford), the status quo on excise for large cars has left still left them at their wits' end.

A series of price reduction announcements by companies which have small cars in their portfolio right after the Budget sops has only added fuel to this fire.

A case in point is the Swift, where the diesel version has seen a price reduction (it is classified as small and therefore now falls in the 12 per cent excise bracket) but the petrol version has not.

Also, many carmakers have already tweaked their models to fit into the lower excise slab. For example, Tata Motors and Ford Motor India have altered the length of some variants of the Indigo and Fusion respectively to bring it within four metres.

The second issue being highlighted by the industry is further excise relief for two and three wheelers. While no two-wheeler maker has come on record to say this, industry insiders tell us that the Tata Nano - slated for launch later this year and eligible for the lowest 12 per cent excise slab - is already giving them sleepless nights.

Already struggling with piling inventories due to a slowdown for most of this fiscal, two-wheeler manufacturers had sought excise duty of 10 per cent in their pre-Budget demand and are again pushing for an excise slab lower than the one for small cars.

Mr. Neeraj Sharma

Neeraj Electronics

CEO, Neeraj Electronics
Jorhat, India

Free Member, Joined :06/09/2007
No of Topics Posted : 112
Reply/Comments : 9