Prices of automobiles, including cars and sports utility vehicles, are set to come down with Finance Minister P Chidambaram today announcing a reduction in excise duty in the interim Budget.
“To give relief to the automobile industry, which is registering unprecedented negative growth, I propose to reduce excise duty,” Chidambaram said. Announcing the next interim budget for the next financial year, Chidambaram said excise duty on small cars and motorcycles–the country’s highest selling segment–should be reduced to 8% from 12%, that on sport utility vehicles should come down to 24% from 30% and larger cars to 20%-24% from 24%-27%.
The government’s proposal would help bolster demand in the automobile market which is currently going through one of its worst phases in recent times. The country’s car sales slid 10% in 2013, the first annual decline in 11 years, because of high fuel prices and borrowing rates.
“The only way to describe this is as a welcome change. Maruti BSE 1.50 % always passes such benefits to customers and this time will be no different. This will hopefully, at least to some extent, revive demand in the automobile industry. The government has to let the reduced duty structure remain at least for the next 12-18 months until the auto industry is back to a 12-15% growth.
The slump in sales continued in January as car sales fell for the fourth straight month with a decline of 7.59 per cent to 1,60,289 units from a year earlier.
