The Hindu Business Line : Car makers upbeat about sales volumes

THE proposed excise reduction for motor vehicles from 32 per cent to 24 per cent in the Union Budget 2003-04 has given automobile manufacturers something to cheer about.

In an upbeat mood, Mr Jagdish Khattar, Managing Director, Maruti Udyog Ltd said the net gain from the reduction in excise duty would be passed on to the consumer.

According to Mr R. Seshasayee, President, Society of Indian Automobile Manufacturers (SIAM), and Managing Director, Ashok Leyland, the reduction in excise duty will stimulate demand and enable Indian auto industry to scale advantages.

Mr Anand Mahindra, Managing Director, Mahindra & Mahindra Ltd, too felt that the excise reduction will lead to a substantial fillip for the car industry.

Two-wheeler manufacturers though were not very enthused by the Budget, with no reduction in excise duties for the segment and the additional imposition of a one per cent duty on two-wheelers (along with motor cars) for the replenishment of the National Calamity Contingent Fund.

Meanwhile, welcoming the Budget, Mr Rahul Bajaj, Chairman of Bajaj Auto Ltd., pointed out that while there will be no direct benefit to two-wheeler manufacturers, the range of initiatives undertaken in the Budget will result in a decline in the cost of production.

On the commercial vehicles front, the excise duty on chassis of motor vehicles has been increased from 16 per cent to 16 per cent plus Rs 10,000 per chassis.

"The Finance Minister has proposed rationalising the tax structure by imposing an ex-factory specific excise duty on body building. This would encourage users to go in for standardised, safer and contemporary design buses and trucks from vehicle manufacturers," Mr Seshasayee said.

"There was an advantage earlier for commercial vehicles manufacturers to source the chassis of the vehicle from outside, which will not be there any more now.

In other words, this proposal would result in a higher value addition from the manufacturing company's point of view," Mr Anand Mahindra said.

Meanwhile, though no specific announcements were made with regards to the tractors industry, tractor manufacturers have welcomed the emphasis in the Finance Minister's speech to credit issues in rural areas, to help put in place a more efficient and effective credit distribution.

Auto component manufacturers too welcomed the Budget proposals.

"The fortunes of the auto component sector is linked to the automobile industry. The reduction in excise duties on cars will help build volumes", Mr Deep Kapuria, President of the Automotive Components Manufacturers Association of India and Managing Director of Hi-Tech Gears, said.

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