The Hindu Business Line : Happy… but want excise cut extended to big cars too

Feb. 29 Major vehicle manufacturers have welcomed the 4 per cent reduction in excise duty to 12 per cent for small cars, two-wheelers as well as for buses and bus chassis, but want similar reduction extended to big cars as well.

Mr S. Nakanishi, Managing Director and Chief Executive Officer of Maruti Suzuki, which makes the largest number of small cars in the country, said in the short-term, the reduction in excise duty will make small cars more attractive for customers and offset the negative impact of higher interest rates. “This is an encouragement for companies like us, which are making major investments in capacity, research and exports,” he said.

Mr Venu Srinivasan , Chairman of TVS Motor, which makes two- and three-wheeler vehicles, lauded the support given by the Finance Minister to the auto sector. “At a time when the two-wheeler industry is going on a downturn, this will come as a shot-in-the-arm to reverse the trend.

He has always been far-sighted and a pioneer in economic reforms in our country and I commend him on his continued efforts in leading the Indian economy forward,” Mr Srinivasan said.

Bajaj Auto’s Executive Director, Mr Sanjiv Bajaj, too said the move should boost the two-wheeler industry’s growth.

Nothing on exports

Mr Arvind Saxena, Vice-President for Sales and Marketing for Hyundai Motors, which makes the i10, Santro and Getz small cars said the new announcement will increase volumes in this segment.

“There was some tapering in demand that was happening. So this will make the small cars more attractive. But there is nothing on exports. We are looking at a scheme like the Target Plus Scheme that was earlier there since we are showing more volumes to our exports even with the hardening rupee,” he said.

Mr K.K. Swamy, Deputy Managing Director for Toyota Kirloskar, which makes the multi-purpose vehicle Innova and Corolla sedan, said the Budget falls short of being perfect because there has been no duty reduction for the bigger cars, which is currently at 24 per cent.

Mr Swamy said the excise duty for all cars and two-wheelers should have been changed to 16 per cent for big cars, 12 per cent for small cars and 8 per cent for two wheelers.

Mr K. Sridharan, Chief Financial Officer of Ashok Leyland, which makes buses and trucks, said bus building being a labour-oriented process, the duty reduction would help the industry survive in the current scenario.

“Instead of importing buses, there would be buses made in India. The bigger picture that emerges was very encouraging - commonisation of service tax and excise, hopefully moving to GST (goods and services tax) at a latter point of time,” he said.

Dr Pawan Goenka, President for the automotive sector, Mahindra & Mahindra Ltd, said the decision to reduce the excise duty of hybrid cars to 14 per cent was a step in the right direction. “It is clearly laying out an emphasis on clean technology,” he said. Mahindra’s hybrid SUV on Scorpio platform is under development and is expected to be out in two years.

“We won’t have any benefit this year,” he said. “One disappointment is that the Budget has not addressed the automobile manufacturers’ request to reduce peak excise duty to 16 per cent.”

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