Auto Sector Urges Govt To Halve Excise On Cars, MUVs

New Delhi, November 28: | Updated: Nov 29 2002, 05:30am hrs
The automobile industry has asked the government to levy a single rate of 16 per cent excise duty on cars and multi-utility vehicles (MUVs).

The existing excise duty on cars and MUVs (seat capacity 6 to 12 people) is 32 per cent.

The industry has said that customs duty on completely built units (CBUs) of commercial vehicles (CVs) should be raised to 60 per cent from the existing 30 per cent. This is also the duty level for CBUs of cars. If this is not possible, then the rates should be increased to the bound rate of 40 per cent.

For second-hand CVs, the customs duty should be 105 per cent, the same as for used passenger cars.

In a meeting held with the finance ministry recently, the industry stated that if the excise duty came down to 16 per cent, it will spur growth in the recession-hit sector.

This is also the first instance of the industry asking for a reduction in excise, across the board.

If it is not possible for the government to reduce the duty to 16 per cent in one go, it can consider bringing down the rate in a phased manner 24 per cent in first phase (2003-04) and 16 per cent in 2004-05, an industry player said.

For multi-axle vehicles, Society of Indian Automobiles Manufacturers (Siam) has proposed an excise duty of 8 per cent, from the existing 16 per cent.

Regarding customs duty which will be crucial to decide the nature of manufacturing for an auto venture, industry feels that import tariffs will be lowered as per WTO obligations. The rate on components should be reduced to 20 per cent, which at present attracts 30 and 25 per cent customs duty.

Industry chamber, Siam has also asked the government to raise the import duty on CBUs of commercial vehicles to at least the bound rate of 40 per cent.

Last year, the industry had sought reduction in excise duty for vehicles to 16 per cent, but had said that if the government is not in a position to bring down the rate to 16 per cent in one go, it should reduce it at least to 24 per cent from the present level of 32 per cent.

For vehicles with a seating capacity of 9 to 12 persons excluding the driver, Siam had suggested a reduction in excise duty from 32 per cent to 16 per cent.