New Delhi: It was a mixed bag of response from the automobile industry towards finance minister P Chidambaram’s budget proposal to cut excise duty on small cars and two-wheelers.
Even as small car makers are gearing up to pass on the benefits to customers., manufacturers of midsize and premium cars say the proposal will create a further gap between the two segments.
Chidambaram has proposed reducing excise duty on small cars to 12% from 16% and a similar cut in duty on two-and three-wheelers.
The minance minister also announced that excise on hybrid vehicles would be slashed from 24% to 14%.
“We are happy with the proposal, but he could have taken a few more steps for the bigger cars and exports,” Hyundai Motor India senior vice-president, sales and marketing, Arvind Saxena told PTI.
He said the company would pass on the excise duty cut benefit on small cars to the customers.
“We are in the process of calculation and latest by tomorrow we will be announcing price cuts,” he said.
Honda Siel Car India senior general manager Jnaneswar Sen said while the step was a welcome one, it would create a further gap between the small cars and the big cars segment.
“This will skew the market further,” he said.
On the excise cut on hybrid cars, Sen said it would not benefit the customers much as the hydrid would be fully imported and the customs duty has not been changed.
Sen said HSCI, which is planning to launch its hybrid Civic later this year, would benefit little from the excise cut as there were very little components which gain from the excise cut.
Suzuki Motorcycle India vice-president, sales and marketing, Atul Gupta said, “Very good, but unexpected to stop degrowth. Finance availability is a major issue.”