Financial Daily from THE HINDU group of publications
Tuesday, Mar 01, 2005

Port Info

Group Sites

Industry & Economy - Automobiles

Auto sector disappointed

Our Bureaus

Mumbai/Bangalore/New Delhi , Feb. 28

THE automobile industry is disappointed over the absence of excise duty relief in today's Union Budget.

The industry had been hoping to see the duty on passenger vehicles with seating capacity of 13 or less reduced to 16 per cent by removing the existing additional duty of eight per cent.

The industry is being overlooked at a time when the automobile sales growth rate in the Indian market is one of the highest in the world.

However, the one million units plus sales anticipated this fiscal come at a rising cost, as input costs have escalated.

Further, from April, new norms - including those governing emission and safety - come into place, which is likely to be accompanied by price revision.

"This will be a year of price increases," said Mr Anand Mahindra, Vice-Chairman & Managing Director, Mahindra & Mahindra Ltd.

Within that, any excise duty relief would have been helpful as it offers a retail cushion against the plethora of input costs waiting to spill into the market.

As Mr Ravi Kant, Executive Director, Tata Motors, said, it wasn't as though a globalised industry like automobiles was expecting the Budget to create demand. "That is for the auto industry to do by itself."

But an excise duty reduction would have helped a new set of realities ease into the market.

"To that extent the Budget was disappointing," said Mr Praveen Kadle, Executive Director, Tata Motors, referring to the elusive duty relief.

Mr K.K. Swamy, Deputy Managing Director, Toyota - Kirloskar Motor: It is disappointing for the auto industry. We expected a further reduction in excise duty primarily because when the excise duty was reduced to 24 per cent from 32 per cent in 2003, the industry grew over 50 per cent cumulatively since then.

Riding on the back of the boom, the Government received more than what they had given away.

Hence, the industry's expectations were justified. We are not sure why the Government decided not to reduce the duty further. It is a clear indication that the Government still considers cars as a luxury item.

Mr Jagdish Khattar, President, SIAM, while stating that the Budget provides for a growth environment for the automobile industry added that "the Government may have lost an opportunity to address the needs of the consumers by reducing excise duty on passenger vehicles, as the prices are set to increase because of the move to Euro III. The growth rates may decline". A reduction in excise would have negated the impact of the price increase brought about by upgrading to newer emission norms.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Auto sector disappointed

Indirect momentum
Stimulus for economy, hopes for the poor
Law soon to allow banks to issue pref shares
Tax savings: Choices galore
FIIs can submit collateral for derivatives
Equity-linked schemes to lose lustre
`No concrete step to hike FDI limit' — Insurers welcome I-T changes
Bankers welcome nod for preference shares, seek clarity
Outlay up 29 pc
Fuel cess for road development up by 50 paise per litre
Centre's market borrowings may rise 68 pc next fiscal
The big picture: Social sector thrust
Corporate income-tax — A mix of lower tax shelters & rates
Petro-products and services — Rates cut, coverage expanded
Domestic airlines flying abroad need not pay ATF tax
The right ring
Alignment of tariffs welcome
More workload for taxman
AMCs gearing up for gold funds
108 SSI items likely to be dereserved
A level playing field for MFs
Gold funds: A new investment avenue
Good for housing sector, says Mistry
Emphasis on infrastructure projects
Budget estimates for 2005-06
Demand-led growth: End of incentive mindset
Service tax net widens — Small players exempt
Backward Regions Grant Fund
Bloom time for floriculture sector
A few things to cheer for plantations
21% tax revenue growth target not unrealistic: Chidambaram
Businesslike, he had them all ears
Good news on the whole
Reprieve for domestic aviation
A survival guide to PC-speak
Local PC makers fear CVD burden
Telecom: Customs relief diluted
Gain for cos with lower depreciation charges
Time to rejoice for insurance sector
Moods swing for B-day brokers
Govt borrowings may hit bonds
I commend...
Experts see red over banking cash transaction tax
While bosses fail to see the big idea, bourses take off
Budget favourable to NCMP: Montek
`A progressive Budget'
No effort to bring down deficit: S&P
Solid, for now
Mixed reaction from cement cos
Duty on clinker goes up
Slew of positives
Excise duty: Cess on petrol & cigarettes
Customs tariff: Lower peak rate
Duty on molasses to cost mills extra Rs 200 crore
Excise duty on molasses `retrograde'
Excise duty on refined oils, vanaspati goes
Fertiliser subsidy hiked to Rs 16,254 cr
Mumbai set for makeover, to become financial hub
Shot in arm for infrastructure
Cracked down the middle
Customs duty on petrochem products cut
... but product prices to stay flat
A mixed measure
Customs, excise duty on crude, petro products cut
Customs duty cut on pharma equipment
Little to spur pharma industry
No shot in the arm
Not a strong enough dose
Rural electrification gets a boost
`Rural power demand will go up'
Import duty on stainless steel, alloy cut; excise duty raised
Making the right noises
Sops for textiles and sugar
Special focus on textile sector
Intricately woven
On a bounce
Cut in excise duty to give fillip to tyre industry
`Tyres will be more affordable'
Paying more for the pint
Cess for health
On fast track
Consumer goods prices may stay put
Excise cut on ACs may not really soothe
Branded baubles to be dearer
Excise levy angers jewellery makers
Real estate sector cries foul
Stealing the show
Positive charge
`No impact on prices of non-ferrous metals'
Cautious optimism among industry captains
Cess on pan, tobacco products to fund rural health mission
Coat of cheer
Disinvestment — going off at a tangent
A case for more FDI
At the heart of a tax on the `fringe'
A recast of personal taxation
Fringe Benefit Tax
More in your purse for the nonce
Personal income-tax structure overhauled — Advantage lower, middle income groups
Cash withdrawals will leave a trail
`Tax on cash withdrawals an anti-evasion step'
Budget and you

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line