There had been an unpleasant upheave in the auto industry over the oncoming expiration date on June 30 of the excise duty reduction on vehicles. Now however, much to the industry’s relief the government has decided to extend the excise duty concessions until December 2014.
Over the last few weeks, the auto sector had been demanding the government to make a decision on the tax benefit before it presents the Union Budget 2014-15 that is slated to get underway on 10th July 2014 - a bid aimed at allowing a possible turnaround in the industry.
"It will be good for the auto industry. The momentum that has been built in last few weeks will continue," Maruti Suzuki India’s chief operating officer of marketing and sales, Mayank Pareek said.
Expressing similar sentiments, Honda Cars India’s senior vice president of marketing & sales, Jnaneswar Sen said, "The industry has had a tough couple of years. We had just started seeing some rays of hope last month and with this extension of the reduced excise rates, we can look forward to building the momentum.”
General Motors India vice president, P Balendran said, “We hope the government will extent it for the full year in the Budget as the sector continues to be sluggish. We also expect government to announce other measure in the Budget to revive the growth.”
A Tata Motors spokesperson remarked, “The excise reduction was a positive step for the automobile industry and we are glad to see it extended as it will help the industry, while we await other significant policy decision to revive the economy.”
The positive announcement from the government has certainly cleared the air of uncertainty of what will happen after June 30 deadline. The Interim Budget in February 2014, allowed for excise duty reduction to 8 per cent from 12 per cent on small cars, scooters, motorcycles and commercial vehicles. The excise duty on SUVs was reduced to 24 per cent from 30 per cent; on mid-sized cars the number was reduced to 20 per cent from 24 per cent and in the case of large cars, the excise duty was revised to 24 per cent from 27 per cent.