New Delhi: Welcoming the government’s move to extend reduced excise rates till December 31 for automobile and consumer durables sectors, India Inc today said the decision will pay dividends in terms of higher growth in industrial production, even as it hoped for further extension.
“CII in its pre-budget Memorandum for 2014–15 has asked for extension of the stimulus package up to March 31, 2015.
“We hope that further extension will be considered by the government keeping in view the negative growth in Automobiles as well as Capital Goods Sectors during the financial year 2013-14,” CII Director General Chandrajit Banerjee said.
In a relief to the automobile and consumer durable sectors, the government today extended the excise duty concession by six months to December 31.
Terming the decision as “bold and courageous” as seen in the context of a severe fiscal constraint that Finance Minister Arun Jaitley is grappling with, Assocham President Rana Kapoor expressed confidence that it will pay dividends in terms of higher growth in industrial production.
The government had cut excise duty on cars, SUVs and two- wheelers as well as consumer durables in the Interim Budget in February to help the industry tide over a demand slump.
“This is indeed encouraging for the manufacturing sector which had witnessed a deceleration last year. This has sent a strong signal also to the industry that Government is according high priority to the manufacturing sector so as to create jobs in the country,” M M Singh, Chairman of Ficci Manufacturing Committee and Chief Mentor, Maruti Suzuki India Ltd said.
“We are hopeful that the forthcoming Budget would further provide measures for the long-term sustainable growth of the sector,” Singh added.
The concessions were valid till June 30 and Finance
Minister Arun Jaitley announced the extension till the year end.
“The move will build confidence in the industry and send good signals out that the BJP-led NDA government is pro-active and committed to introduce similar reforms to the economy in the forthcoming budget so that the growth is revived and additional demand generated with the new jobs opportunities,” said PHD Chamber of Commerce President Sharad Jaipuria.
Excise duty on small cars, scooters, motorcycles and commercial vehicles will continue at 8 per cent from 12 per cent previously. The factory gate duty on SUVs stands at the reduced rate of 24 per cent as against 30 per cent.
The duty on large cars will continue at 24 per cent compared with 27 per cent earlier, while the duty on mid-sized cars will stand at 20 per cent from 24 per cent.
Excise duty on capital goods and consumer durables will continue to attract a lower duty of 10 per cent as against the pre-budget rate of 12 per cent.