Pass on duty cut benefit to consumers,Govt tells carmakers

Disappointed with the automobile industry for not passing the benefit of 4 per cent excise duty cut announced in December to consumers...

Written by Priyadarshi Siddhanta | New Delhi | Published: March 2, 2009 11:52 pm

Disappointed with the automobile industry for not passing the benefit of 4 per cent excise duty cut announced in December to consumers,the government has asked the Department of Heavy Industry (DHI) to do some plain-speaking with car companies. A government panel of secretaries has also told the Department of Industrial Policy and Promotion (DIPP) to closely monitor the actions of the players.

“The 4 per cent cut in excise duty was undertaken to rejuvenate sectors such as automobiles and white goods. But we found that the benefit of this duty cut is not being passed on to the consumers. So,we have asked the DHI Secretary to form a committee and look into the issue,” Secretary,Planning Commission Subas Pani said.

The issue has also been discussed at a recent meeting of the Committee of Secretaries (CoS),wherein the Finance Ministry expressed concern on the matter and argued that unless benefits were passed on,the exercise would be fruitless. “The DHI has been asked to prevail upon the auto industry to roll back the prices to the levels that existed before the excise duty cut,” a senior official said.

According to the official,the auto industry was grappling the downturn and it was felt there was a need to take remedial measures. Sales in the Indian automobile market dipped 7.4 per cent in January with passenger cars,two-wheelers and commercial vehicles failing to cash in on new year purchases and an imminent recovery still looking distant. However,at least two major car companies Maruti and Hyundai hiked prices by up to 2 per cent,partially nullifying the cut announced in December.

In another major move to bail out the ailing auto sector from its fiscal morass,the government has asked the states to replace their age-old bus fleet with new 15,000 buses under the ambitious Jawaharlal Nehru National Urban Renewal Mission (JNNURM) involving an expenditure of around Rs 7,000 crore.

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