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Our Bureau

NEW DELHI, Dec. 2

THE Society of Indian Automobile Manufacturers (SIAM), in its pre-Budget memorandum 2003-04 to the Ministry of Finance, has suggested several key changes in the duty structure on automobiles.

According to Mr R. Seshasayee, President, SIAM, the philosophy behind one of the key proposals made on reduction of Central excise duty on passenger cars and utility vehicles is that the current rate of duty is not economically tenable as it makes the total incidence of taxes and other levies more than 65 per cent.

He said that the 32 per cent excise duty was a punishing rate and suggested that ideally the total incidence of indirect tax should be limited to 25 per cent (single rate of Cenvat 16 per cent and State VAT nine per cent). This step would not only provide a fillip to the automobile industry but also ensure better affordability to the customer.

Some of the major issues raised by SIAM in the memorandum include reduction in excise duty from 32 per cent to 16 per cent for motor cars, principally designed for the transport of not more than six persons, excluding the driver, including station wagons and racing cars (passenger cars); reduction in excise duty from 32 per cent to 16 per cent for motor vehicles principally designed for the transport of more than six persons, but not more than 12 persons, excluding the driver (UVs); resolution of the issue of refund of SED (16 per cent) for ambulance and taxis; and refund of SED (16 per cent) for motor vehicles having seating capacity up to 13 persons including driver when registered as maxi-cab (taxi).

As far as bus and truck body building segments are concerned, SIAM has stated that there should be a level playing field for both OEMs and independent bus and truck body builders in the unorganised sector.

Mr Seshasayee said that SIAM has suggested that either both the sectors should be exempted from payment of duty on body portion or both pay duty on it.

This becomes more important in view of the new stringent safety standards that are to be implemented in future. Mr Seshasayee pointed out that the current system is unfair to the OEMs since the final responsibility still rests with the chassis manufacturers.

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