Government may extend the excise duty cut beyond December 31

The Finance Ministry has been discussing internally, the extension of the excise duty cut for cars beyond December 31. Earlier, the decision was taken when  the automobile industry was still struggling  with slow demand due to high interest rates. However, the government is yet to announce this extension officially.

During the Interim Budget in February, the government had reduced the excise duty for cars, SUVs and even two-wheelers till June 30. Once the new government took the duties, they decided to extend the duty cut by more six months which will end in December 31.

"We were expecting this to happen because the government is very conscious of the need to expand manufacturing and they have realised that the car industry has not been performing as good as it was hoped for. At this point, if the excise duty goes up, it could easily push the car industry into the negative territory. So, what they have done is that they are consistent with their approach towards industrial manufacturing,." said RC Bhargava, chairman, Maruti Suzuki.

As per SIAM, India’s car sales might fall below the earlier target for 2015 financial year. Sales in October fell 7.5 per cent to 2,21,151 units, after growing for six consecutive months. We strongly feel the government will provide an extension because the new government is focusing a lot on the manufacturing industry through its “Make in India” campaign. And, the  auto industry is one of the highest contributors to India’s GDP.