With passenger car sales touching a 12-year low, Heavy Industries Minister Praful Patel has requested Finance Minister P. Chidambaram for withdrawal of additional duty on Sports Utility Vehicles (SUVs). Alternatively he proposed additional duty on high-end SUVs only.
At the same time, it has also been suggested that with diesel prices being raised progressively, it would be a good gesture to the industry, if a statement can be made that this three per cent additional excise duty on SUVs would be removed next year. Such clarity will help the auto industry to commit large capital expenditure for diesel vehicles production, the Minister has argued.
In a letter to Chidambaram, Patel said, “The Auto Industry and my Ministry, especially in the light of negative growth in the industry in the current year, appeal to you to withdraw the additional duty.”
The General Budget for 2013-14 raised the excise duty on SUVs from 27 per cent to 30 per cent. But this increase will not apply to SUVs registered as taxis. Heavy Industries Ministry is the administrative Ministry for auto industry.
The Heavy Industries Minister also gave an alternative. “If imposing this additional duty is entirely unavoidable on account of revenue and the subsidised price of diesel, may I request you to exempt all such vehicles classified as SUV that have an assessable value of up to Rs 10 lakhs from the ambit of three per cent additional excise duty,” he said.
The present notification issued by the Finance Ministry envisages coverage of vehicles of above 4 metres length, 1500 cc and above engine capacity, and 170 mm and above ground clearance for the levy of additional three per cent excise duty.
“With this criteria, it is unfortunate that commonly used vehicles in rural and semi urban areas such as Bolero, Sumo, Tavera, Trax and many others have come under this additional duty. Needless to say that neither are these vehicles high end nor luxurious,” Patel said.
He also mentioned that they are a necessity and a compulsion for vehicle owners given the poor rural road network and their lower price band. Moreover, these vehicles have a higher ground clearance. The Minister also felt that there is no specific definition of SUV either across the world or in India. Even the Motor Vehicles Act or the Central Vehicles rules do not have such classification.
Reacting on this communication, Deputy Director General of Society of Indian Automobile Manufacturers (SIAM) Sugato Sen said, “That should be good for the industry as assessable (manufacturing) value is less than Rs 10 lakh for most of the domestic SUV manufacturers. The prices of such vehicles go up to around Rs 14 lakh on-road, post taxes like octroi, excise duty and VAT.”
Shishir.Sinha@thehindu.co.in