By: Sharmistha Mukherjee
The automobile industry is rooting for rationalisation of excise duties levied on manufactured products and incentive schemes for fleet modernisation programmes in the Union Budget to be tabled later this week.
Sugato Sen, deputy director general of indusrtry body Society of Indian Automobile Manufacturers (SIAM) said, “There is a need to rationalise and reduce taxes levied on vehicles. We have recommended that the overall excise duty be brought down to 10 per cent and tax slabs for different categories of vehicles be rationalised because it is stunting growth of the sector.”Sales of passenger vehicles in the domestic market grew by just 3.62 per cent to 2.13 million between April and January this financial year.
Sen said that apart from providing the much required fiscal incentive to the struggling industry, excise duty must be lowered keeping in mind the roadmap for GST implementation.
The UPA government in the interim Budget last February had slashed excise duty on cars, SUVs, two-wheelers and consumer durables in order to boost sectors that were struggling due to the economic downturn. While excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 per cent from the earlier 12 per cent, that on SUVs was cut to 24 per cent from 30 per cent. For mid-sized cars, it was slashed to 20 per cent from 24 per cent and for larger vehicles to 24 per cent from 27 per cent.
In June, the new government extended the excise duty concessions by six months to December 31, 2014. Sen also said there must be steps in the Budget for fleet modernisation and “incentives must be given for replacing 15-year old vehicles” to encourage replacement. As per available data there are 1.5 million two-wheelers, 3,50,000 cars, 50,000 trucks, 5,000 buses and 50,000 three-wheelers aged above 15 years plying on Indian roads.
SIAM has also recommended that the Centre earmark resources to promote sale and create infrastructure for electric vehicles.
The expenditure finance committee has cleared a proposal for allocation of Rs 886 crore for National Electric Mobility Mission Plan for the next two years.