The Union Finance Minister P Chidambaram presented the Interim Budget this morning. During the presentation he said the government has managed to contain both the fiscal deficit and the current account deficit besides, keeping them below target. With general elections around the corner the minister was careful in his speech and focused primarily to pacify the auto industry. 

Following are the highlights of the Interim Budget that are specific to the Auto Industry.

– Excise duty on SUVs reduced to 24 percent from 30 percent

– Excise duty for large and mid-segment cars reduced to 20 percent.

– Excise duty on small cars, and two wheelers have been reduced to eight percent from 12 percent only till 30 June 2014. 


 According the Automotive and Transportation Practice, Frost & Sullivan, the impact due to cut in Excise duty will immensely benefit SUV segment. The retail prices are expected to be reduced by Rs 40,000 to Rs 50,000 and will trigger vehicle sales in the coming three months. Further reduction in Central and State Tax (exports) will promote exports of vehicles. It will also help in overall cost optimisation for vehicle manufacturers.

According to Frost & Sullivan, the excise duty reduction announced today by the Finance Minister will be a saving grace for the automotive sector which has registered continuous dip in sales for the fourth consecutive month in January. Manufacturers are expected to transfer the benefits to the customers to promote sales. Overall the automobile sales are expected to register growth in the next three months making a short term impact.



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