After a tough year, the domestic auto industry is hoping for a quiet Budget and less changes from the policy front as it hopes to pick up the sales momentum. The main expectation is of clarity on diesel pricing, which will help it better plan future investments.
It has asked the Government to continue with its current customs duty regime on cars, while lowering the additional excise levied on large vehicles.
“We haven't asked for much. Just that the Rs 15,000-additional excise on cars more than four metres length should be removed. Also, a scheme to promote hybrid and electric vehicles needs to be approved,” said Mr Vishnu Mathur, Director-General of Society of Indian Automobile Manufacturers.
With the Budget announcements around a month away, the industry's views have been forwarded by its nodal Heavy Industries Ministry as a memorandum to the Finance Ministry.
Mr R.C. Bhargava, Chairman of Maruti Suzuki, added, “There has to be something on the pricing of diesel this time. I doubt if there will be anything more exciting coming for cars.”
Though industry observers agree that mass commercialisation of hybrid/electric cars is still a few years away, a policy decision on infrastructure creation and support for investments on technology development from the Government is expected.
An excise duty exemption for such vehicles has also been sought.
Old vehicles
SIAM has also suggested a scheme for returning old vehicles on the road – a move that is expected to help improve air quality levels.
“We need a one-time fleet modernisation. Vehicles made before 2000-01 should be taken off the road - at least those registered after follow some level of Bharat Stage norms,” Mr Mathur said.
Component sector
For the auto component sector, a Rs 7,500-crore technology development fund has been proposed that would help domestic suppliers access finance at reduced rates of interest for their modernisation, upgradation and technology acquisition.
This would be done by financing 50 per cent of the project cost through a soft loan, with an interest subvention of 4 per cent to be met from the fund corpus. The level of investment required by the component industry for the period 2012-2016 is expected at Rs 15,000 crore.