Budget: Auto industry discusses woes with commerce minister

Budget: Auto industry discusses woes with commerce minister

Budget: Auto industry discusses woes with commerce minister

Amid the automobile industry seeking maintenance of a lower tax regime and asking for other incentives to revive demand, Commerce and Industry Minister Nirmala Sitharaman Monday met representatives of industry body SIAM ahead of the Union Budget and discusses problems faced them.

"Discussed issues facing automobile industry with representatives of Society of Indian Automobile Manufacturers (SIAM)," Sitharaman tweeted after the meeting.

Industry is awaiting whether the new government will raise excise duties, which were lowered in the interim budget this February, providing a much-needed boost to the automotive sector at a time when it struggled the worst ever slowdown.

In the Interim Budget in February, excise duty on small cars, scooters, motorcycles and commercial vehicles were cut to 8 per cent from 12 per cent earlier.

Keeping in mind the prolonged slowdown, the duties were cut on all segments starting from midsize cars.

Car sales, especially the passenger vehicles, were down for two consecutive months of March and April.

It was only in May that these looked up. Analysts said, the cut in excise duty had worked with a lag.

The car industry has been seeking a similar lower tax regime from the new government as it feels it is not out of the woods yet.

Although the government has spoken of belt tightening and fiscal consolidation, expectations are high that a lower excise duty regime for vehicles will be allowed to continue in even in the budget to be presented in the second week of July.

A weak monsoon forecast is another dampener for the automotive industry as a major chunk of their sales in car and tractor segment comes from the rural and semi-urban areas whose farm economy is highly dependent on monsoon.

Comments from SIAM on their meeting with the minister could not be obtained.