Auto News

Finance Minister announces Duty Cuts for Small Cars and Hybrids

By Motortrend India Staff   |   28 February,2008

Indian Finance Minister P Chidambaram has finally given some concessions to the car manufacturing industry in the budget session this year. The minister announced a cut on excise duty on all small cars from 16 percent to 12 percent. Small car buyers have reason to cheer, as the manufacturers plan to pass on the excise duty cuts to the customers. The hybrid cars will now attract lower duty of 14 percent from the current levy of 24 percent.

Presenting the 2008-09 annual budget speech, P Chidambaram said that “Manufacturing sector is the backbone of any economy. It is consumption that drives production and it is production that drives investment…. I believe there is need to give a stimulus to the manufacturing sector.”

However, the budget cuts received mixed reposes from the car manufacturing sector. Responding to the budget speech, Arvind Saxena, Hyundai Motor India Senior Vice-President Sales and Marketing said that he was happy with the finance minister’s proposal for small cars. He said that Hyundai would pass on the benefit of excise duty cuts on small cars to customers. “The price cuts will be announced by March 1. We would require one day to complete our calculations as per the proposals. But he could have taken a few more steps for the bigger cars and exports.”

The General Manager for Honda Siel Car India Jnaneshwar Sen responded saying that the duty cuts would create further gaps between the small car and the big car segments.

For excise cuts on Hybrids, he said “The excise cuts would not create any benefit for the customer as they will be fully imported and customs duty would remain constant.” Honda plans to get the Civic Hybrid at the end of this year. Sen added that very few components in the Civic Hybrid would benefit from the excise cuts.

Related Content