Budget Reactions: FY14 Budget a mixed bag for automobile sector: SIAM

Budget 2013-14 has turned out to be a mixed bag for the automobile industry, according to RS Sandilya, President Society of Indian Automobile Manufacturers. While increase in tax of imported Completely Built Units (CBU) is likely to promote domestic auto manufacturers, hike in excise duty on sports utility vehicle was completely unanticipated.

However there still not absolute clarity on what category of SUVs will face higher excise duty. "We need to go to the fine prints to find out which are the vehicles which are impacted but I am happy that he has not distinguished between diesel and petrol,"  Sandilya told CNBC TV18

Below is the berbatim transcript of his interview.

Q: As far as the auto sector is concerned, excise stays; the tax on sport utility vehicle (SUV) is gone up from 27 percent to 30 percent. Some exemptions being continued as far as electric vehicles are concerned. But on imported vehicles and that is where we need clarity whereas on the bike side it is very clear, engines over 800cc will be taxed higher. What are you picking up as far as the clarity on the imported vehicles are concerned?

A:  He said imported Completely Built Units (CBUs) will be taxed and the increase in tax has been announced around 75-100 percent. To some extent the auto industry has always been saying that the imported vehicle duty should be increased as far as custom duty is concerned because we want to promote manufacturing in the country. So, from that point of view, it is a welcome move from the auto industry perspective, it will improve manufacturing and people will not get CBUs in.

Q: But a big negative as far as SUV makers are concerned?

A: As far as SUV excise duty is concerned, it is totally unexpected, from 27 percent to 30 percent is an increase, which is unanticipated. We need to go to the fine prints to find out which are the vehicles which are impacted but I am happy that he has not distinguished between diesel and petrol though most of the SUVs are diesel but not made a distinction from fuel perspective but the increase is still not necessarily a welcome move, we need to find out.

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