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    Union Budget 2015: Auto industry hopes for roll back of excise duty hike

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    Venkat Desirazu

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    Union Budget 2015: Auto industry hopes for roll back of excise duty hike

    The 2015-2016 Union Budget will be presented in the Indian Parliament on February 28 and ahead of its highly anticipated arrival the auto industry is echoing common sentiments across segments and sectors. There is hope that this government will bring some further relief to the industry. We have put togther some of the common demand across the industry.

    1. Roll back in excise duty

    Sitting on the top of the priority list of nearly every manufacturer and even the SIAM is the rollback in the excise duty hike which was implemented on January 1 after multiple extensions. This was basically a continuation of what the previous regime had announced before losing the elections. It was subsequently carried on by the  new Finance Minister Arun Jaitely and was extended till December 31. 
    The duty on small cars, motorcycles, scooters and commercial vehicles was reduced from 12 per cent to eight per cent while that on SUVs was cut from 30 per cent to 24 per cent. Subsequently, a majority of car manufacturers passed on these tax benefits to the customers by announcing a cut in prices.

    2. Introduction of subsidy for EVs

    Given the significance of electric vehicles in the future, we feel that it is high time the Centre implement the Rs 14,000 crore subsidies for electric vehicles. This will go a long way in helping that segment of cars move from their nascent stage and become palatable to a wider audience. In the wider scheme of things, it will give an incentive to people to purchase these vehicles and use them on a daily basis.  As the now interim-CEO of Mahindra Reva, Chetan Maini, put it when we interacted with him last year, "If there is demand for EVs, then the related infrastructure will automatically be installed.”

    3. Reduction of interest rates and customs duty

    The arrival of the new government last year brought about a positive change in terms of consumer sentiments and there was a noticeable increase in terms of purchase across various sectors, auto industry included. With so much to look up to, we hope that the BJP-led government will (further) reduce interest rates. This will in turn bring down the price of loans and encourage more people to buy cars. In relation, it is also hopeful that the Centre will bring about a reduction in customs duty as it will bring down the prices of imported components and if you have guessed it right, bring down the prices of cars that come via the CKD route/brought in via the CBU route.

    4. Taking the steps that will green light the implementation of GST

    This is one of the major hopefuls as the implementation of GST (goods and services tax) will ensure that vehicle prices are evened out across the country and that the cost of ownership of vehicles becomes the same everywhere. It is expected that the steps to green light the process will be passed over the course of this year and its implementation will take place in 2016. Expect a major announcement tomorrow.

    5. Improving infrastructure

    Transport Minister Nitin Gadkari had a made a significant numbers of promises over the course of 2014 including the scrapping of RTOs, removal of a significant number of toll plazas and most importantly development of a large number of roadways. We hope that these visions for a modern India get the required allocation of national spending and green lighted for implementation this year.

    6. Clarity on customs pact with Europe

     In the most simplest of terms, such a pact will make the cars coming from the European side significantly cheaper and maybe even encourage the manufacturers to bring better models to the Indian market.

    Whatever be the announcements during the budget tomorrow, we hope that it will benefit you - our readers and users who benefit from the services our website offers with regard to the car buying experience. Come back to us tomorrow afternoon for an analysis of what the auto industry has got out of the 2015 Union Budget.

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