The interim budget for 2014 has a goodie qualified to delight the heart of petrol heads in general and the auto industry in particular. The FM armed, obviously, with the patronage of his party proposed a reduction on the excise duty on cars and bikes.

Here is the snapshot & the reduced Excise Duties:

  • Motorcycles & Scooters: 8% (earlier 12%)
  • Small Cars: 8% (earlier 12%)
  • Bigger Cars: 20-24% (earlier 24-27%)
  • SUVs : 24% (earlier 30%)

The excise duty on small cars and motorcycles will be reduced from 12% to 8%. Small cars means the cars which are under sub 4 meter in length and follow the engine guidelines. Majority of hatchbacks fall in this category.

Ford-EcoSport (6)
Excise duty on EcoSport will reduce to 8% from 12 percent currently.

Mid-sized cars are the ones which are greater than 4 meters in length and have larger engines. Generally sedans starting from C2 segment fall in this category.

The government realizes the soup the auto industry is presently immersed in and wishes to relieve some of the unpleasantness by reducing taxes so that the manufacturers could slash prices and boost up the sales.

The car sales in the country are bobbling presently at around 10% instead of a desirable 12%-15%-mark; and all is not due to the excise duty imposed upon it. The fuel prices have been slithering upwards and the auto loans have been expensive for quite some time now. Nevertheless, the proposed changes will help.

New-Honda-City
New City will attract 20% duties from the current 24%

When the planned reduction will come into effect the auto manufacturers will definitely pass the benefits to the consumers. The quantum of reduction will vary but it will be a fairly decent reduction.

Soon after the announcement by the Finance Minister, SIAM shot a thank you note to us and expressed their appeasement at the decision. SIAM said that this step will definitely have a positive impact in the overall Auto Industry and the manufacturers at the same time.

SIAM also said that betterment of the auto-industry will result in the upliftment of the associated industries like components, raw materials, electronics, plastics, chemicals etc. Next, we are awaiting to see manufacturers announcing reduction in prices.


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