The 2013-14 Budget will not bring smiles to the automobile industry; but there is certainly some relief. The government has not hiked the diesel car prices or the excise duty, so the prices of the small and large cars will remain unchanged. However, there are few changes in the tax rates for the SUVs and the premium cars.
The finance minister, P.Chindambaram, announced that the duty on SUVs will be increased to 30 per cent; an increase of three per cent from current rate of 27 per cent. There is still some ambiguity in the government’s definition of SUVs, but prices of premium models like the Toyota Fortuner, Mahindra XUV500 and Ssangyong Rexton, along with that of the premium MUVs like Toyota Innova will see a hike of around 2.5 per cent to 3.5 per cent immediately.
Similarly the customs duty on imported cars has been increased from 75 per cent to 100 per cent. The move is mainly to generate additional revenue for the government and to encourage more localisation. However in immediate future it will only increase the prices of cars imported as CBUs (Completely Built Unit). Expect premium cars prices to jump by 10 per cent to 15 per cent in the coming weeks.
The government has accepted the SIAMs proposal to extend the concession on the import of key components for the hybrid and electric cars in the budget – mainly the lithium ion batteries. It will encourage Indian manufacturers to invest in development of vehicles running on alternative energy. Also, we can now expect Mahindra to launch the Reva e20 soon.