Automobiles and consumer electronics are to get costlier as the Finance Ministry has decided not to extend the excise duty concessions after December 31. Central excise duty is levied on a manufactured product at the factory gate and is part of the maximum retail price paid by a consumer.
However, the Heavy Industries Ministry has requested a two-month extension of the excise relief for the auto industry. The ministry representatives argued that car and other vehicle makers were facing a tough time due to low demand and re-imposing a higher excise duty will force them to increase prices. The automobile prices are expected to go up by 4 % and it will certainly impact the January sales.
In its interim Budget in February, 2014, the UPA Government had lowered the excise duty on small cars, motorcycles, scooters and commercial vehicles from 12% to 8%, on sports utility vehicles from 30% to 24%, on mid-segment cars from 24% to 20 %, and on large cars from 27 % to 24%. Similarly, on capital goods and some consumer goods, the excise duty was cut from 12 % to 10 %.
The cut aimed to boost the manufacturing sector. In April-October, the manufacturing growth stood at a mere 0.7 %, though October recorded a negative growth of 7.6 %. The excise duty cut, supposed to end on June 30, 2014, was extended by the Modi Government up to December 31.