Cars, bikes to get cheaper

In an unexpected bounty for the automobile industry, finance minister P Chidambaram today slashed excise duties for small cars...

In an unexpected bounty for the automobile industry, finance minister P Chidambaram today slashed excise duties for small cars, two and three wheeler vehicles and also on chasis for buses from 16 to 12 per cent. While duties on buses and two wheelers were expected to be reduced, the cut on small cars took everybody by surprise. However, differences within the industry resurfaced as excise duties on big cars saw a reduction by only 2 per cent 24 to 22 courtesy the 2 per cent cut on CENVAT and the difference in duty structure between the two segments has become even more pronounced.

8220;It is a very positive budget for us and there is a definite thrust for small cars and two wheelers. It also addresses the issue of public transportation and the excise duty cut in buses is welcome,8221; said Society for Indian Automobile Manufacturers director general Dilip Chenoy.

8220;The only area of some concern is that excise duty on bigger cars remains more or less the same. We had even earlier voiced our opinion against differential rates of duties in cars and with this reduction the duty on big cars is almost twice as much as on small cars.8221;

The slash in excise rates will help companies like market leaders Maruti Suzuki, Hyundai, Tata and General Motors apart from all the two wheeler manufacturers like Hero Honda, Bajaj, TVS and Honda Motorcycle and Scooters, India where the last excise cut happened more than a decade back. The companies were quick to react that the benefit would be passed on to the consumers.

8220;We are happy with the excise duty cut which reiterates the government8217;s intention of giving small car manufacturing a boost in the country,8221; said Hyundai Motors India Ltd vice president Sales and Marketing Arvind Saxena. Hyundai has slashed prices of the newly launched i10 Rs 12-16,000, flagship Santro Rs 12-14,000 and Getz Rs 14-16,000. Maruti and Tata are also expected to announce price cuts shortly. The good news does not end here.

Excise duties on hybrid vehicles also went down from 24 to 14 per cent. Further excise on metal scrap for steel and aluminium was done away with completely which would benefit auto component manufacturers. Component makers are also relieved that the customs duty has been left unchanged.

8220;We are relieved that the customs duties have been left unchanged while the reduction in excise duty for cars will fuel demand and have a positive impact on us as well,8221; said Automotive Component Manufacturers Association of India ACMA executive director Vishnu Mathur.