The Interim Budget 2014 was presented by Indian Finance Minister, P Chidambram today, where we had announced a slew of measures to rejuvenate the auto industry. The Minister had slashed the Central Excise duty on small cars, scooters-wheelers from 12 percent to eight percent. Furthermore, Chidambaram has also brought down the central excise duty from 30 percent to 24 percent on SUVs and from 27 percent to 24 percent on large and mid-sized cars. Overall, the Indian automotive industry is happy as the slew of reactions prove it.
Jayant Davar, Co-Chairman and MD, Sandhar Technologies and Chairman of CII – Northern Region said: “In fact, it was a highly optimistic speech by the Finance Minister. The excise duty cut on cars and SUVs will have a positive impact on the auto component industry as well. Having said that, we expect this will eventually push the demand in the auto segment, but we cannot predict the time frame for this to happen”.
The apex body, Auto Component Manufacturers Association (ACMA) has also expressed its happiness over the development. Harish Lakshman of the Rane Group, the Chennai-based auto component major and President of ACMA said: “We are extremely happy that the Finance Minister P Chidambaran, despite the trying times had presented a pragmatic Interim Budget. Therefore, ACMA welcomes the tax cut in excise duty on vehicles announced by the Government”.
Industry body, the Society of Indian Autombiles Manufacturers (SIAM) has also welcomed the excise duty reduction announced by the Union Government. Vikram Kirloskar, President of SIAM said that the industry body believed that this reduction in excise duty would further reduce the acquisition price thereby manufacturing vehicles becoming more affordable. With the result, the consumer sentiment would improve and thus lead to the revival of demand for automobiles”.
Pawan Goenka of Mahindra & Mahindra, who was also the Past President of SIAM termed it as a nice budget and added that Chidambaram did not succumb to populist measures, besides that fact that the elections are round the corner. The Minister had announced excise duty reduction of cars, SUVs, farm equipment and motorcycles, which would in turn help the demand to pick up. ‘However, the unfortunate part is that no announcement came on the commercial vehicle segment, which is badly hurt. I hope that there is something positive coming from the Minister to rejuvenate the CV segment’, Goenka added.
The Confederation of Indian Industry has also hailed the announcement being made on the auto segment. Kris Gopalakrishnan, President of CII said: “The vision presented in the Budget is pretty much in tandem with what we believed in. Chidambaram has laid lot of emphasis on the manufacturing segment, which is pivotal in reviving the sagging economy. The last year or so, the performance of the manufacturing sector has been consistently poor. Therefore the Government intervention was inevitable. We thank the Finance Minister for understanding our problems by announcing the reduction of excise duty in some of the most impacted sub-sector of manufacturing. The excise duty cut on sectors such as automobiles, capital goods and consumer electronics is laudable as this will help revive the demand in these areas”.
A Daimler India Commercial Vehicles spokesperson, said on the Excise Duty Reduction: “We welcome the decision by the Government. This move comes at a point when the customers are facing difficult times. DICV will pass on the entire value to the customer in line with our transparent pricing policy. The decision will benefit the customers”.
There is possitive reaction pouring in from passenger car segment as well. The Chennai-based Renault India has welcomed the excise duty reduction announced by the Government. While welcoming the reduction of excise duty on automobiles, Mr. Sumit Sawhney- Country CEO and Managing Director for Renault in India said: “Indian automotive industry has been going through a rough patch lately, although we saw some positive sentiments at the recently concluded 12th Auto Expo in Greather Noida. Slowing GDP, high interest rates, and general bearish consumer sentiment has put the sector on the slow lane. In that light, government’s move to reduce excise duty will provide a much-awaited impetus to the sector. We welcome this move and look forward to the step being part of the government’s long-term strategy for sustainable growth for the industry”.