Car manufacturers plan to request more benefits in the 2009 budget for Indian car industry to help maintain its sales performance. It is demanding the removal of specific duties on big cars, tax sops on vehicles for rural markets, and revival of the duty free credit scheme. These sops will encourage exports and help maintain the sales graph in the domestic market.
Last year, the slowdown in the car industry pulled down sales performances of all car manufacturers forcing the government to announce a stimulus package in December 2008. The government cut down excise duty by 4 percent on all vehicles leading to price cuts of upto Rs 2 Lakh.
Thanks to the stimulus package, the auto industry again posted double digit growth levels. Now, car manufacturers want another stimulus package to support the sales momentum. "The last packages helped boost demand. We expect a similar tax concession in the upcoming budget", said CEO and Managing Director of Maruti Suzuki Mr. Shinzo Nakanishi.
The same sentiment was voiced by CEO and President of Honda Motors Mr. Masahiro Takedagawa. He said, "The government should simplify the complex tax structure imposed on auto industry. We are of the opinion that all cars, irrespective of the size of dimensions should be brought under a single tax structure."
SIAM director Sugato Sen quoted, "It is good that incentives for small cars are welcome. However, the government is discouraging big cars. Also utility vehicles that are primarily used in rural areas do not attract any sops." The automotive industry has requested the government to introduce concessional tax structure for vehicles used in rural areas to help revive sales graphs. It also demanded that the 4 percent cut introduced in December be made permanent. The car manufacturers also demanded that the research and development initiatives be exempted from tax and seek Government support for Indian Car Industry.