The government has extended by another six months till December the cut in excise duty levied on the automobile industry.
The government has extended by another six months till December the cut in excise duty levied on the automobile industry.
"Extension of excise duty cut to reduce revenue in short term, but benefit economy in the long run," said Finance Minister Arun Jaitley at a press briefing.
The automobile industry has witnessed diminishing sales in passenger and commercial variants due to high fuel and interest costs coupled with an overall economic slowdown.
In the interim budget 2014-15, the government had reduced central excise duty on small cars, scooters/two-wheelers from 12 to 8 per cent.
It had also reduced the duty from 30per cent to 24per cent on SUVs (sports utility vehicles), and medium segment sedans from 27-24per cent to 24-20 per cent, respectively.
For a long time, the automotive industry had been demanding cut in excise duty to spur demand. The manufacturers have been increasing the vehicle prices due to hike in their input costs.
According to the Society of Indian Automobile Manufacturers (SIAM), car sales fell 4.65per cent during 2013-14 and stood at 1,786,899 units from an offtake of 1,874,055 units in the previous fiscal.
The announcement led to automobile manufacturers making healthy gains on the equity markets. The Bombay Stock Exchange's (BSE) automobile index gained 114.38 points or 0.76 per cent in Wednesday's trade.
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