No extension to excise sops, car and SUV prices up in 2015

The auto industry, which had been faced with two successive years of reduced sales finally saw a 10.01% growth in April-November 2014 with sales of 1.33 crore units as compared to sales of 1.21 crore units in the same period a year earlier. Government of India has now decided not to extend reduced excise duty rates being offered to this sector following which automakers in the country will be faced with no other recourse but to increase prices.

car and SUV prices up in 2015
A dealer stock yard outside Ahmedabad.

In February 2014, the government had permitted interim relief which was extended in June and expires as on 31st December 2014. Excise duty was reduced to 24% from 30% for SUVs and from 24% to 20% on midsized cars while it was brought down from 27% to 24 % where larger cars were concerned. Automakers had been asking the government to extend this incentive, as its removal would once again push the industry into the red.

With no extension to the excise relief in sight, excise duty on cars up to 4 meters long will once again revert back to 12% while on larger cars and on SUVs excise duties will now stand at 24% and 30% respectively. The final price to buyers will however be much higher as it will include various other levies and insurance, since excise duty is charged on factory gate prices.