In what can be taken as an early Diwali gift to the Indian auto industry, Anant Geete, Minister for Heavy Industries, has announced that the Excise Duty cut will be continued into next year as well.
Originally, the government had cut excise duty on cars, SUVs and two-wheelers as well as consumer durables in the Interim Budget in February to help the auto sector in India tide over the sluggish growth it was experiencing. It was valid till July 30 and then later extended till December 2014, but now after further consideration, Geete has approached the Finance Ministry for an approval to this new plan.
"I think the industry needs support thus the excise duty cut will continue beyond December and shall be extended at least till March 2015," said Geete.
The extension of duty concession will enable continuation of excise duty on small cars, scooters, motorcycles and commercial vehicles at the current level of 8 per cent from 12 per cent previously. The factory gate duty on SUVs stands at the reduced rate of 24 per cent as against 30 per cent. The duty on large cars will continue at 24 per cent as against the earlier 27 per cent, while the duty on mid-sized cars will stand at 20 per cent instead of 24 per cent.
Along with this announcement, Geete also informed reporters about the auto recall policy, he said, “We are taking all steps to boost the automobile sector and the (auto recall) policy will be framed with that objective”.
Regarding the National Electricity Mobility Mission Plan, for electric vehicles, Geete said: “We want to start the plan from Delhi. We will soon roll out the plan from Delhi”. The Mission Plan projects a potential for 6-7 million units of new vehicles sales of Electric Vehicles (EVs), along with resultant fuel savings of 2.2-2.5 million tonnes that can be achieved by 2020.
This news is definitely a relief to the automobile sector, even now, as it’s still not over the hill. The automotive industry in India has in the past four months been on a path of positive growth and this extension will further increase the confidence of the manufacturers as well as the buyers.