Although he did not propose any increase in taxes on other consumer products, a rationalisation of excise duties for all categories of mobile phones will lead to a marginal increase in the prices of entry level mobile phones costing less than Rs 2,000.
"To give relief to the automobile industry which is registering unprecedented negative growth, I propose to reduce excise duty..," Chidambaram said while presenting the Interim Budget for 2014-15.
As per his proposal, excise duty on small cars, motorcycles, scooters and commercial vehicles has been cut to 8 per cent from 12 per cent earlier.
Likewise, the Sports Utility Vehicles will attract 24 per cent excise duty, down from 30 per cent earlier, while large cars that used to attract excise of 27 per cent will now be levied only 24 per cent. Moreover, the excise duty on mid-sized cars will be 20 per cent from 24 per cent earlier.
While giving sops to the automobile sector, Chidambaram said: "I propose to make appropriate reductions in excise duty on chassis and trailers."
With the Finance Minister proposing a reduction in excise on capital goods and consumer non-durables on all goods falling under Chapter 84 and 85 of schedule of the Central Excise Tariff Act up to June 2014, many consumer items are set to become cheaper.
These include TVs, refrigerators, computers, printers, keyboards, mice, hard disks, scanners, vacuum cleaners, dish washers, water coolers, torch lights, digital cameras, hair dryers, electric irons, microwave oven, MP3 players and DVD players.
In a move to boost local manufacturing of handsets, Chidambaram said: "To encourage domestic production of mobile phones, which has declined, and reduce the dependence on imports, which have increased, I propose to restructure the excise duties for all categories of mobile phones. The rates will be 6 per cent with CENVAT credit or one per cent without CENVAT credit."
This will, however, lead to a marginal increase in the prices of entry level mobile phones costing less than Rs 2,000, which are mostly imported from countries like China and Taiwan.
A majority of mobile phones sold in India, even by domestic firms like Micromax, Lava and Karbonn, are imported. However, Samsung and Nokia have manufacturing facilities in the country.
Another daily use item, soaps that are manufactured in India can also witness a softening of prices as Chidambaram rationalised customs duty structure on non-edible grade industrial oil and its fractions, fatty acids and fatty alcohols at 7.5 per cent.
People looking to store umbilical cord blood for future use can now be expected incur lower expense with the service tax of 12 per cent on cord blood banks being withdrawn.
"Ministry of Health and Family Welfare has requested that services provided by cord blood banks are also healthcare services and should be exempt from service tax. I propose to accept the request," Chidambaram said.