SIAM and ACMA hail reduced excise duty extension for Indian auto industry
SIAM President, Vikram Kirloskar welcomes Governmentâ€™s decision to extend reduced Excise Duty benefits announced 2014-15 Interim Budget and thanks the new government for its timely support on behalf of the Indian automotive industry.
Quick and timely action by the newly elected government reflects responsiveness to automotive industry and manufacturing sector needs. Indian auto industry can take advantage of earlier announced reductions for another 6 months in hopes to boost sales and profitability in the face of a stagnant sales market. Excise Duty announced back in February 2014 entailed reduction from 12% to 8% on small cars, two wheelers and commercial vehicles. Excise duty reduction on mid & large segment cars went from 24% to 20% and 27% to 24%, respectively, and on SUVs from 30% to 24%.
Early benefits from interim budget excise duty reduction can be gauged from the fact that May 2014 automobile sales in India was the 1st time in 15 months that sales were up. In fact, even a difficult segment like heavy commercial vehicles showed signs of early improvement. Indian industry reported production in India at 1,990,010 vehicles (passenger, CV’s, three wheelers and two wheelers) over 1,742,939 in May 2013 reporting 14.18% growth.
Extension of reduced Excise Duty will influence positive ripple effects by improving buyer sentiment to fuel sustained recovery for an automotive industry that has been struggling for over 2 years now. Excise Duty reduction can help propel growth, investments and more jobs to encourage a stable economy.
President ACMA, Harish Lakshman welcomed reduced excise duty extension on automobiles for CY 2014. As the industry will need to make big strides to overcome current stagnant sales, ACMA hopes the announcement encourages automotive sales, and thereby benefit component sector too.