Chidambaram Cuts Excise Duty On Two-Three Wheelers

The union finance minister P Chidambaram on Monday has slashed excise P Chidambaramduties on small cars, two- and three-wheelers, bus and bus chassis to 12% from the current 16%.

While addressing industry leaders, the FM said that the government will re-examine the Budget plans if anything had crept in mistakenly.

Mr. Chidambaram said, “We are not infallible. There is always scope for correcting something which has come in inadvertently. But there is no case for revisiting the philosophy of the Budget.”

In order to encourage clean fuel technology, Mr. Chidambaram also reduced excise duty by 10% on hybrid cars, which are yet to be launched in the Indian market, from 24%.

However, FM left excise structure unaltered for big cars and SUVs that effectively entails that the excise gap between small and big cars and SUVs have climbed up from 8% to 12%.

High interest rates had hindered the sales of two as well as three-wheelers as the industry saw a fall of over 8% each.

Top manufacturers, including Hero Honda, Bajaj Auto and TVS Motors, had also been asking for a change in the duty rate targeted to provide the much needed fillip.

The majority of car makers thinking over a price increase in the recent year, due to rising input costs may now extend the benefit of the reduction in excise duty to consumers that ranges from Rs 7,000 to Rs 16,000.

The two-wheeler industry too will turn over the benefit of the fall to the buyers after due consideration.

TVS Motors Chairman and Managing Director Venu Srinivasan said, “This is definitely a shot in the arm, which will propel the industry into the right direction, especially when the two-wheeler industry has been declining over the time.”

Volvo Bus Body Technology Managing Director Akash Passey said, "We definitely welcome the tax reduction step of the government. This will provide an impetus to encourage people to opt for public transport, which has been the focus for a while." Buses too are poised to become cheaper due to the excise duty reduction.

Hyundai India Vice-President (Marketing and Sales) Arvind Saxena said, "Although we welcome the duty cut, which is primarily targeted to improve small car sales, we are disappointed that there is no focus on the export of cars."

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