Auto makers want roll back of duties

The increase in excise duty from 25 per cent to 30 per cent on multi utility vehicles (MUV), he said, was unjustified as these vehicles primarily service the needs of the rural areas and inter-city tour taxi operators. Such a levy would only further depress demand.

The industry also objected to the eight per cent special duty on all imports across the board and the five per cent cut in modvat credit, he said adding that it would have a spirallingeffect in increasing costs of auto components as well as vehicles manufactured. This would only further hit the industry which is presently faced with a major demand crunch.

Already, the MUV manufacturers have increased prices of their vehicles pursuant to the government imposing the five per cent excise on them. While Maruti and M&M have increased prices their models, Telco has also effected a Rs 10,000 to Rs 30,000 price increase on its MUV models with immediate effect.

According to industry watchers, the cascading effect of the duties announced in the budget would lead to the growth rate in the automobile industry dropping by another 15 to 20% during the current fiscal. The government had taken this step to plug some loopholes in the earlier duty structure which the manufacturers were utilising to their benefit. The government had been charging 40% excise on passenger cars and 25% on MUVs. This concession was given as MUVs were regarded as rural vehicles. But some manufacturers started making vehiclesunder this classification but marketed them as urban cars even while enjoying the 15% duty benefit.