Call for lower excise duty on big cars

Concerned over the downturn in the automobile industry, Heavy Industries Minister Vilasrao Deshmukh has asked the Finance Minister to cut excise duty on big passenger cars by more than half to 8 per cent.

"I met with the finance minister and has recommended him. . . ," Deshmukh said, while exuding confidence that his suggestions would get a favourable consideration.

Besides, the minister also asked thefinance minister for imposing a 10 per cent duty on import of power plant equipment to overcome the dumping by Chinese producers.

Deshmukh, who took the wishlist of auto industry and BHEL to the finance minister ahead of the Budget, said, "Definitely, he was very sympathetic," when asked about Mukherjee's response to his suggestions.

The government reduced excise duties on cars smaller than 4 metres to 8 per cent in December 2008 as part of stimulus package, while duty on bigger cars left unchanged at 20 per cent.

The industry's body Society of Indian Automobile Manufacturers (SIAM) has maintained that there should be uniformity of taxation across all segments.

"Unless and until we give some sops they (sales) cannot be revived," the minister told PTI in an interview.

In addition to the 20 per cent excise duty for big cars, vehicles having engine capacities between 1500 cc and 1999 cc attract a fixed duty of Rs 15,000, while those above 2000 cc have to pay Rs 20,000 more.

The fuel guzzlers have witnessed a fall in sales due to the impact of the slowdown. In May this year, sales of high-end cars declined by 7.59 per cent, though the  total passenger cars market grew by 2.48 per cent compared with the same month in 2008.