DHI for Extending Excise Duty Cut on Auto Sector Beyond June

Department of Heavy Industry (DHI) is likely to pitch for extension of the excise duty incentive to the automobile sector beyond June 30 to help it tide over the difficult situation.

In the Interim Budget, the government had reduced excise duty on vehicles to give a boost to manufacturing sector. The incentive ends on June 30.

"The automobile manufacturers have benefited from the reduction in excise duty and we believe the sector still needs the relief as it will take some time to recover from slowdown.

So we are planning to recommend continuation of the excise duty cut beyond June 30," an official said.

Finance Minister Arun Jaitley, who is currently holding pre-Budget consultations with different sectors and groups, is likely to present the regular Budget early next month.

Excise duty for small cars, scooters, motorcycles and commercial vehicles was slashed to 8 per cent from 12 per cent earlier. For SUVs it was cut to 24 per cent from 30 per cent.

Excise or factory duty on large cars was also cut to 24 per cent compared with 27 per cent, while the duty on mid- sized cars was reduced to 20 per cent from 24 per cent previously.

Car sales in India fell for the second consecutive fiscal in 2013-14 with a drop of 4.65 per cent as the auto industry continued to struggle with demand slump due to a sluggish economy. However, the sales have shown some improvements in May.

The drop in car sales in 2013, as per experts, was a result of a prolonged demand slump due to the economic slowdown.