Future of Auto Excise Duty to Remain Undecided till December 31

As auto makers anxiously watch if reduced excise duty regime would be extended to next year, Finance Minister Arun Jaitley today said they would have to wait till December 31. "Wait till December 31," Finance Minister Arun Jaitley said when asked if government would be extending the reduced excise duty incentive expiring on December 31.

The previous UPA government had cut excise duty on cars, SUVs and two-wheelers in the Interim Budget in February to help the industry tide over a demand slump.

Excise duty was reduced to 24 per cent from 30 per cent in the case of SUVs, 20 per cent for mid-sized car from 24 per cent and 24 per cent for large cars from 27 per cent. In June, the new government led by Narendra Modi extended the excise duty concession by six months to December 31.

After two successive years of sales slump, the auto industry had shown some growth posting a growth of 10.01 per cent in April-November period this fiscal at 1.33 crore units as against 1.21 crore units in the year-ago period. Car makers have asked the government to extend excise duty relief saying removal of this incentive could push the industry into a negative territory.

Maruti Suzuki India Chairman R C Bhargava today said if the incentive is not continued beyond December 31, automobile prices would go up further in the next year. "It could derail the auto industry. If it lapses then prices go up by 4 per cent and we will have to pass on the burden to the customer. If it remains the same then we will continue to pass on the cost benefit," he told reporters.

Already, many automobile companies, including Maruti, Hyundai, Tata MotorsBSE -0.50 %, Renault, Nissan and Mahindra & Mahindra, have announced that they would increase prices of their vehicles from January citing rising input costs.