Mumbai, March 2 : The government has taken cognisance of the fact that the automobile industry has been stuttering on a rough road for quite some time now. There is much in the budget that should please the auto industry. The customs duty is proposed to be increased to 105 per cent from 35 per cent ie three times the peak duty. The total duty on such imports would be 180 per cent. In view of the Quantitative Restrictions (QRs) being lifted, the government has sought to protect the domestic automobile manufacturers from the glut of cheaper second hand imports of cars, motorcycles and scootersOverall the impact of budget proposals on automobile majors is likely to be positive. A quick look at the table below sums up the story. While the likes of Tata Engineering, Bajaj Auto, Hero Honda that are into manufacturing of two-three wheelers and cars will be positively impacted owing to the protection by way of customs tariffs and excise duty cuts, there would be hardly any change for companies that are primarily into the manufacture of heavy commercial vehicles (HCV), utility vehicles (UV) and tractors, where the Budget has not provided much by the way of excise duty cuts.Excise duty on motorcycles, scooters and taxis has been reduced to 16 per cent from 24 per cent as the 8 per cent special excise duty (SED) has been abolished. Whereas, on cars it has been reduced to 32 per cent from 40 per cent as the the SED has been brought down to 16 per cent from the 24 per cent. Further, the benefit of accelerated depreciation of 50 per cent has been provided on the purchase of new commercial vehicles.
Duties on light, medium and heavy commercial vehicles have remained unchanged and hence, there is not much for manufacturers of these vehicles. It must be recalled that in the 2000-01 Budget, excise duty was increased by 2 per cent on MUVs whereas, excise duty on tractors less than 1,800 cc was increased to 16 per cent thereby, adversely affecting these manufacturers.
The measures would provide an impetus to the sagging demand for automobiles mainly two-three wheelers and cars. Almost all the major car manufacturers have responded by reducing he prices of their products in the luxury as well as the basic segment. The cuts have been in the range of Rs 35,000-Rs 45,000 in respect of the premium segment whereas, it is Rs 10,000-Rs 18,000 in the basic segment. The year 2000-01 has proved to be particularly disappointing for the auto industry. A brew of factors such as -rising fuel costs, sales tax rationalistion in certain states and tighter emission norms had pared the bottonmlines of most of the auto companies.
According to SIAM, during the nine month period to April-December 2000, sales of all commercial vehicles including that of HCVs, MCVs and LCVs declined by 13.5 per cent to 1,01,593 units from 117,363 units during the corresponding period in the previous year.
In December 2000, cumulative sales dipped by 33 per cent to 12,866 units from 19,297 units. Tractor sales dipped by 11 per cent to 1.76 lakh units (1.98 lakh units) during April-December 2000, while in December 2000 they were down by 14 per cent.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
