With the validity of excise duty cuts on cars, two-wheelers and commercial vehicles, announced in the interim-Budget, set to lapse soon, automobile manufacturers met Commerce Minister Nirmala Sitharaman on Monday to convince her of the need to extend the benefit beyond June 20.
The industry has also sought reduction in excise duties on large cars and lowering of duty slabs for the sector from the existing three to two for boosting domestic demand.
“The Minister, in a meeting with industry chambers last week, had questioned the need for Budgetary concessions for the automobile industry,” a Commerce Ministry official told
As Monday’s meeting with members of the Society for Indian Automobiles Manufacturers (SIAM) specifically focussed on the automobile industry, manufacturers had more opportunity to justify their demands.
Fall sales The industry talked about falling sales of automobiles and the need to incentivise the sector to spur manufacturing and increase employment, the official added. Domestic sale of passenger vehicles in 2013-14 was 6 per cent lower than the previous year while exports remained flat.
“Discussed issues facing automobile industry with representatives of SIAM,” Sitharaman tweeted after her meeting without revealing the Government’s thought process on the matter.
While the Government may consider retaining the lower excise slabs, a further reduction in excise looks difficult with the existing Budgetary constraints, the official added.
Excise duties on small cars, scooters, motorcycles and commercial vehicles were brought down to 8 per cent from 12 per cent in the interim-Budget announced mid-February by the then Finance Minister P Chidambaram. Duty cuts were also made for SUVs and large cars from 30 per cent to 24 per cent and for mid-size cars from 24 per cent to 20 per cent.
Further lowering SIAM, in a letter to the Revenue Secretary last month, had sought further lowering of duties on large cars to 20 per cent from 24 per cent and simplification of the excise duty slabs on cars by moving to a two-tier system from a three-tier system.
While the automobile industry had a five-tier duty structure earlier, it was reduced to a three-tier structure in the interim Budget ranging between 8 per cent and 24 per cent.
The industry contributes 25 per cent to the manufacturing GDP and comprises 18 per cent of the total excise collection while employing 19.5 million people, according to SIAM.