There’s no denying the fact that automobile sector will be the most important sector in the minds of newly elected Modi government and the Finance Minister will give something extra here. This much-needed boost to the automobile sector will ultimately translates into a better economy and generation of more jobs. A flourishing auto sector will also stand for the country’s collective aspirational mind and a healthy economy, we hope the Finance Minister will understand these criticalities and give some goodies to the automobile industry.
Sales in automobile sector have been on the decline in the past two years, but the auto industry is slowly showing signs of recovery in past few months as sales were up some 14%. This improved percentage is mostly due to a short-term cut in car prices by the car makers. The automakers are hoping the Union Budget 2014 will help keep this upward momentum going.
The automobile industry of India is hoping that their luck will change when the newly elected Modi government presents their first Union Budget. The automobile industry is one of the main drivers of the country’s economy. The rising fuel prices and increasing inflation are some of the key factors responsible for a decline in car sales.
But looks like the Modi government is likely to shift its focus more on other key areas in this year’s Union Budget, like export incentives, free inter-state movement of vehicles, promotion of electric and hybrid vehicles, prevention of overloading, better road safety, emission and fuel-efficiency norms to list a few.Let's Watch the Live streaming of Union Budget 2014 and hear the Finance minister’s Budget Speech which will be Live here at 11am to know what is in store for the Automobile sector.
In the Interim Budget presented by UPA Government in February, excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 per cent from 12 per cent. It was reduced to 24 per cent from 30 per cent in the case of SUVs, 20 per cent for mid-sized car from 24 per cent and 24 per cent for large cars from 27 per cent. The reduction in excise duty, was given to the automobile sector with an aim to give some impetus to declining sales, was applicable till June 30.
Most of the carmakers had passed on the benefit of excise duty reduction to customers by cutting product prices. According to SIAM, excise rates would revert back to the earlier level after the Union Budget 2014. The auto industry body has been lobbying hard with the government for extension of the reduced excise rates.
With uncertainty over excise duty structure on automobiles as reduced rates have already expired on June 30, Hyundai Motor India is already planning to raise the car prices if the cess rate is reverted back to the same levels as it were before the Interim Budget presented by UPA government in February 2014.
Hyundai, which is India’s second largest carmaker by volume, said it had passed on the entire benefit to the customers while absorbing the impact of change of value on dealer stock which was compensated to dealers when the government reduced excise duty in the interim budget. Tata Motors also said they would wait for the Union Budget 2014 before taking any decision to increase the prices of their cars.
To see the prices of cars going down post Budget 2014 the interim relief of Excise duty should be extended. The Modi government should reduce the interest rates and the fuel prices should be controlled. This will be a boon for both customers and the auto-industry which can see improved sales or else the customers will have to shell out more to buy their favorite dream car.
Lets wait and see the impact of Union Budget 2014 on car prices if it is going to increase or decrease post budget.
Watch the Live streaming of Union Budget 2014: Finance minister’s Budget Speech will be Live here at 11am