New Delhi, Feb 29 (UNI) With excise duty rates being cut across all the major sectors in the auto industry, automobile manufacturers were of the view that Budget 2008-09 is good for the industry but said the result of the measures introduced can only be judged in the due course of time.
''Overall it was a very good budget for the industry as a whole, including for buses, two and three wheelers,''said Society of Indian Automobile Manufacturers Director General Dilip Chenoy.
However, he said one negative point remained in the budget is that of the differential in excise tax between the small and large cars, which has been increased further.
Two years back excise tax on small cars was cut by a third to 16 per cent while big cars remained at 24 per cent. Today the rate of excise taxation for small cars stands at 12 per cent while bigger cars remain at 24 per cent.
Government also slashed excise rates on two-wheelers from 16 per cent to 12 per cent in order to spur demand in the segment.
Suzuki Motorcycle India Pvt Ltd managing Director Satya Sheel, however, is not convinced if the excise cut will solve the problem.
''The budget can be good but I think with the waiver of Rs 60,000 crore in farmer loans, we are going to our own sub-prime sort of a problem. All the loans have had an entry in the books of accounts and now they are to be waived off. Money from the tax payers will be used to support the banks,'' Mr Sheel said.
He added that the inherent problem with two wheelers have been the lack of credit and further strain of writing off Rs 60,000 crores will make credit all the more difficult and further tightening of lending activities.
''Reduction of excise rate would have been more significant if the populist budget had addressed the credit needs. There is only so much this budget can achieve,''he added.
Mr Chenoy said the current sentiment in the rural areas was of little or no spending on the backdrop of farm loans. The current farm debt waiver may in turn spurn growth in these areas and banks may even look to engage in activities which offset their losses.
"We will have to wait and watch the impact of the farm debt waiver and the excise rate cut," Mr Chenoy said.
TVS Motor Company Chairman Venu Srinivasan said "At a time when the two-wheeler industry is going on a downturn, this will come as a shot in the arm to reverse the trend." Maruti Suzuki India Ltd Managing Director and CEO S Nakanishi said in a statement that in the short term, the reduction in excise duty will make small cars more attractive for customers and offset the negative impact of higher interest rates.
''This is an encouragement for companies like us, which are making major investments in capacity, research and exports,'' Mr Nakanishi said.
The company has the Maruti 800, Alto, Wagon R, Zen Estilo and Maruti Swift in the small car category eligible for the 12 per cent excise rate.
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