New Delhi: Heaving a sigh of relief over the government's decision to extend reduced excise rates till December 31, auto industry Wednesday welcomed the move saying it would help the sector overcome the prolonged demand slump.
"It will be good for the auto industry. The momentum that has been built in last few weeks will continue," Maruti Suzuki India Chief Operating Officer (Marketing and Sales) Mayank Pareek said.
Expressing similar sentiments, Honda Cars India Senior Vice-President (Marketing & Sales) Jnaneswar Sen said: "The industry has had a tough couple of years. We had just started seeing some rays of hope last month and with this extension of the reduced excise rates, we can look forward to building the momentum."
He also said the announcement from the government clears the uncertainty of what will happen after June 30 deadline "and is a much needed support to the industry from the new government".
While the Budget is slated to be presented on July 10, in the Interim Budget in February, excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 percent from 12 percent.
It was reduced to 24 percent from 30 percent in the case of SUVs, 20 percent for mid-sized car from 24 percent and 24 percent for large cars from 27 percent.
The reduction in excise duty, given to the auto sector with an aim to give some impetus to sagging sales, is applicable till June 30 which has now been extended till December 31.
While welcoming the development, General Motors India Vice-President P Balendran said: "We hope government will extend it for the full year in the Budget as the sector continues to be sluggish. We also expect government to announce other measures in the Budget to revive the growth."
Society of Indian Automobile Manufacturers (SIAM) Executive Director Vishnu Mathur termed the development as "a big relief for the auto industry,".
Commenting on the development, a Tata Motors spokesperson said: "The excise reduction was a positive step for the automobile industry and we are glad to see it extended as it will help the industry while we await other significant policy decisions to revive the economy."
India's automobile industry has been struggling from a prolonged market slump. Car sales in India fell for the second consecutive fiscal in 2013-14 with a drop of 4.65 percent at 17,86,899 units as compared to 18,74,055 units in the previous fiscal.
In 2012-13, car sales in India fell 6.69 percent, the first decline in a decade.
However, in May, snapping two successive months of fall, car sales in India grew by 3.08 percent riding on positive sentiments over formation of a stable government at the Centre and lower excise duty in the interim Budget.
Commenting on the excise cut extension on automobiles till December 31, Toyota Kirloskar Motor Vice Chairman and Whole-Time Director Shekar Viswanathan said: "The auto industry is going through difficult times and we expect the government would take cognisance of this when coming out with the new financial bill in July 2014".
Renault India Country CEO and Managing Director Sumit Sawhney said the extension of excise duty reduction for automobiles is a welcome move and a step in right direction by the government, fortifying its intent to support the progress in the auto sector.
"We would like the government to take a long term view to have a unified excise duty structure and look forward to further reduction in the duty," he added.
SIAM President Vikram Kirloskar said the extension of the reduced excise duty will contribute positively to improve the buyer sentiment and would help in bringing about a sustained recovery in the automotive industry that has been languishing for over two years now.
"This will go a long way in bringing back growth, investments in the industry as well as encourage higher employment," he added.
