SIAM urges the centre for excise duty cuts

Finance Minister Arun Jaitley is all geared up to present Budget 2015. The Society of Indian Automobile Manufacturers (SIAM) has high expectations from Jaitley and wishes that he reduces excise duty on automobiles in the upcoming budget to combat the slowdown faced by the auto industry.

SIAM expects Government to introduce a lower excise duty regime. The current level of taxes on automobiles is very high, and the auto industry body states that the industry needs to grow sustainably for which it requires Government support. 

SIAM also states that the government has emphasised on adoption of alternate energy and has also released a roadmap for electric vehicle penetration through National Electric Mobility Mission Plan. It further states that this plan needs to be put in action for which the government needs to allocate sufficient funds so that the industry starts working on delivering on the plan expectations. 

The auto industry body has also requested the government to abolish NCCD on vehicles and reduce CST from two per cent to one per cent as was proposed by the centre when the announcement of implementation of GST was made. The auto industry body has also suggested that under GST all taxes should be subsumed, including road tax. 

SIAM has also requested the government to introduce a scheme for incentivising replacement of vehicles, which were registered before the year 2000 when the first emission norms were introduced in India.

The auto industry body is also of the opinion that the government should put on high agenda and take measures towards restarting stalled infrastructure projects to help revive demand particularly of commercial vehicles.

The UPA government had decided on excise duty cuts on cars, SUVs (sports utility vehicles), two-wheelers and consumer durables in the interim Budget 2014 in order to give a boost to the auto industry.

The UPA government had reduced excise duty on small cars, scooters, motorcycles and commercial vehicles from 12 per cent to eight per cent last year. The SUVs received a 30 per cent excise duty nefit as opposed to the 24 per cent; while  For SUVs, it was cut to 24 per cent from 30 per cent; for mid-sized cars, to 20 per cent from 24 per cent and to 24 per cent for large cars from 27 per cent. The excise duty for the consumer durables sector was reduced from 12 per cent to 10 per cent.

The Modi-led government in June last year, decided to extend the excise duty concessions by six months to December 31, 2014. The auto industry wanted further extension of the duty relaxation, but the NDA government decided against it. Automakers, therefore, hiked the prices of the vehicles as a subsequent result of excise duty rolling back to pre-February levels.