Cars and SUVs are Bound to Become Costlier Since January 2015 in India
With the new year knocking at the doorstep cars, SUVs and two-wheelers will become expensive from the first of January. The move has come about because the government has decided not to extend the reduced excise duty rates provided to the sector.
A senior Finance Ministry official explained that “The government is not extending the excise duty concessions on the auto sector”.
The previous UPA government had cut excise duty on cars, SUVs, and two-wheelers in the interim Budget in February. This decision was taken in order to boost the auto sector,.
The Excise duty on SUVs was reduced to 24 percent from 30 percent whereas in the case of mid-sized cars it was reduced to 20 percent from 24 percent and 24 percent for large cars from 27 percent.
The new government led by Narendra Modi extended the excise duty concession by six months in June. It has extended now up to December 31, however, it won’t be further extended.
After two successive years of slowdown in the sales, the auto industry has grown by 10.01 during the April-November period. The fiscal jumped at 1.33 crore units as against 1.21 crore units in the year-ago period.
Car sales in India rose by 9.5 percent in November as a resultant effect of the continued relief in excise duty and lower fuel prices, that too, after declining for two months in a row.
Domestic car sales recorded a sale of 1,56,445 units. This rise was at 9.52 percent from the last year November when there was a total sale of 1,42,849 units of the car. This data has been released by the Society of Indian Automobile Manufacturers (SIAM).
The government had been receiving requests by the carmakers to extend the excise duty relief. They say so mostly out of the fear that the removal of this incentive could push the industry into a negative zone.
Maruthi Suzuki India Chairman, Mr. R C Bhargava believes that if the incentive is not continued, automobile prices would go up further in the next year.
Commenting further he said that if there is no extension on the excise duty relief it will affect the common buyer’s pocket. In his words, “It could derail the auto industry. If it lapses, then prices go up by 4 percent and we will have to pass on the burden to the customer”.