The Union Budget 2010 has done it to us again. Finance Minister Pranab Mukherjee, on Friday, announced a two per cent increase in excise tax on prices of large cars, sports cars and MUV’s (Multi-Utility Vehicles in the general budget. That’s the uglier side of the budget.
The better side is that the small car segment would continue to get the 4 per cent excise duty relief that was introduced by the government as an industry stimulus package during 2008, when auto sales had hit an all time low.
That’s not all. There are other components of the 2010 Union Budget which would negatively affect the vehicle buying decisions of the consumers. There has been increase in fuel prices with petrol becoming costlier by Rs 2.67 and diesel by Rs 1.50 (Delhi).
It does not end there. The Union Budget 2010 has announced a hike on the excise duty of steel as well which would result in vehicles manufacturing becoming an expensive affair and the costs being passed on directly to the buyers.
Some of the auto manufacturers in the country have already announced a hike in the prices. Maruti Suzuki India, India’s largest car maker, has said that the Maruti Suzuki cars will become costlier by 2 percent, while Hyundai Motor India has hinted at a price rise of Rs 6,500 – Rs 25,000 on an average on all its cars sold in India.
But considering all this, we can feel good, at least, about the corrections in the excise duty on Electric Vehicles. The electric vehicles will now get exemption from custom duty and other special duties on the components used. This is going to move the auto industry’s focus on innovation, R&D and product development which would bring in competitiveness on a long-run.
In 2008, the UPA government had reduced the excise duty on small cars (from 12 per cent to 8 per cent) and big cars from 24 per cent to 20 per cent. This move helped the auto industry recover from the global economic slowdown in 2008.
With the car prices and fuel prices going up, let’s see how the consumers respond.
The better side is that the small car segment would continue to get the 4 per cent excise duty relief that was introduced by the government as an industry stimulus package during 2008, when auto sales had hit an all time low.
That’s not all. There are other components of the 2010 Union Budget which would negatively affect the vehicle buying decisions of the consumers. There has been increase in fuel prices with petrol becoming costlier by Rs 2.67 and diesel by Rs 1.50 (Delhi).
It does not end there. The Union Budget 2010 has announced a hike on the excise duty of steel as well which would result in vehicles manufacturing becoming an expensive affair and the costs being passed on directly to the buyers.
Some of the auto manufacturers in the country have already announced a hike in the prices. Maruti Suzuki India, India’s largest car maker, has said that the Maruti Suzuki cars will become costlier by 2 percent, while Hyundai Motor India has hinted at a price rise of Rs 6,500 – Rs 25,000 on an average on all its cars sold in India.
But considering all this, we can feel good, at least, about the corrections in the excise duty on Electric Vehicles. The electric vehicles will now get exemption from custom duty and other special duties on the components used. This is going to move the auto industry’s focus on innovation, R&D and product development which would bring in competitiveness on a long-run.
In 2008, the UPA government had reduced the excise duty on small cars (from 12 per cent to 8 per cent) and big cars from 24 per cent to 20 per cent. This move helped the auto industry recover from the global economic slowdown in 2008.
With the car prices and fuel prices going up, let’s see how the consumers respond.
posted by admin @ Monday, March 1st, 2010 2 Comments » link to this post
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