Presenting the Interim Budget 2014, Union Finance Minsiter P Chidambaram announced excise cuts to help the automobile industry to do better, as it is facing market slowdown. Chidambaram announced the cut in excise duty on small cars and two-wheelers from 12 to eight percent and on SUVs from 30 percent to 24 percent. These changes will be valid till June this year. After that the Government will review, when the regular Budget is presented by the new Government that is coming to power.
The Minister also proposed three more industrial corridors: Chennai-Bangalore, Bangalore-Mumbai and Amritsar-Kolkata. The Interim Budget has provided Rs 246,397 crore on account of three main subsidies: Fuel, food and fertiliser and Rs 65,000 crore has been allocated for fuel subsidies.
The Industry body, the Society of Indian Automobile Manufactuers (SIAM) has welccomed the excise duty cuts on automobiles and said that this would have positive impact on the demand and on manufacturing as a whole.
Vikram Kirloskar, President of SIAM, while welcoming the announcements, said: “We would like to thank the Union Finance Minister for recognising the need for a more moderate tax structure for the automotive industry and for accepting SIAM’s tax related recommendations. We believe that this reduction in Excise Duty would reduce the acquisition price thereby making vehicles more affordable which would improve the consumer sentiment and hopefully revive the demand for vehicles”.
Stating that the Automotive industry as the engine of growth for the manufacturing sector as a whole, the official said that as it supports key industries like auto components, capital goods, raw materials, electronics, chemicals, plastics and software. “Revived growth in the automotive industry would have significant positive impact on these key downstream and upstream manufacturing sectors that largely depend on the performance of the auto sector. This could hopefully herald a revival of the manufacturing sector in the days to come”, Kirloskar added.
Jnaneswar Sen, Senior Vice President – Marketing & Sales, Honda Cars India Ltd said: “The interim budget is positive for the auto sector with across the board excise duty cuts. It has come as a relief for the industry. We hope these reductions will propel the demand in the coming months and anchor support for a better first quarter. It will give an a much needed boost to the industry as it looks to recover from the ongoing slow down.”