Make in India - this is the shout-out that our new Prime Minister Mr. Narendra Modi giving to the world. And with the upcoming budget, experts from all the industries are expecting more benefits to support the PM’s initiative. Indian automobile industry has been going through a dull phase for the past couple of years. But the signs are positive. By 2015, India is expected to be the fourth largest automotive market by volume in the world while India’s car market is expected to grow to over 6 Million units annually by 2020. Global car manufacturers have been ramping up investments in India to cater to growing domestic demand. And all these would benefit from a new reduced excise duty structure.
The excise duty cut, which was introduced in last year’s interim budget, though extended till December 2014, was revised back to its higher rates from January 2015. Till Dec’14, small cars, motorcycles, scooters enjoyed an excise duty of 8%, reduced from 12% while commercial vehicles and SUVs were charged 24%, reduced from 30%. For large and mid-segment cars, the duty was reduced from 27% to 24% and 24% to 20% respectively. But all these were revised back to their original rates and the carmakers had no other way than to pass on the burden on to the consumers.
The automobile industry will be more than happy if the excise duty is reduced back to the previous budget’s rates and anything over it will also be welcomed. The new government is expected to acknowledge these expectations as the automobile sector contributes to 7% of the country’s GDP by volume and the passenger car vehicles sales is expected to increase at a Compound Annual Growth Rate (CAGR) of 16% between 2013-20. The Indian automobile market is estimated to become the 3rd largest in the world by 2016, accounting for more than 5% of global vehicle sales. The total turnover in 2010-11 was USD 58.5 billion while it is slated to be USD 145 billion by 2016.
