Union Budget 2010 Impact on Automobiles sector

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Though the Union Budget 2010 did not satisfy all the expectations of the sector, but it is anticipated to have a positive impact on the automobiles sector in the coming years as well as on the Indian economy as a whole.

Union Budget 2010 Impact on Automobiles sector

The Finance Minister in his Union Budget 2010 speech announced implementation of new tariffs on cars and other vehicles. Below is the list of Union Budget 2010 Automobiles sector proposals:
  • 10% tariff imposed on small cars which until now benefited from the 8% excise tariff.
  • Tax on big cars will be charged at 22% against the previous 20% in addition to ` 15, 000
  • Excise tariff to be charged on Diesel and Petrol at Re 1 on the every litre. This can also be translated as an increase in price of ` 2.58 per litre and ` 2.67 per litre on diesel and petrol respectively.
  • Hike in car prices due to higher input price and increase in excise tariff on steel.
  • Maruti, Hyundai and Tata have already declared an increase in their car costs.
  • 4% of excise tariff on electric cars against the previous 8%.
  • Full exemption from custom tax on electric automobiles and on its components.
  • Concessional tax on Solar power rickshaws due to removal of excise tariff on solar panels.
Union Budget 2010 feedbacks from Automobiles sector

Automotive industry experts believe that the several proposals announced by the FM will have a fruitful impact on Automobiles sector of India. The improvement in Excise tariff on electric cars will help the manufactures to access CENVAT credit and avail for tax exemptions on customs tariff on electric cars components.

As the automotive industry is recovering from the financial downturn, it did not expect any increase in excise tariff and implementation of tariff on petrol and diesel. Being one of the major growth drivers of Indian economy, the sector expected the extension of incentive allocation for some time till its complete recovery.

The industry was hoping for a decrease in the huge gaps in excise tariffs between small cars and CVs which the FM did not address. However, the tax consessions granted to eco-friendly vehicles were welcomed by the sector.

Last updated on : 15-05-2011

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