Cars, bikes may get costlier after budget 2011

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If the auto industry leaders are to be believed, the Indian car and bike buyer should be gearing up to pay more for ride. The government is expected to roll back the excise duty cut it offered as a stimulus package. The excise duty on small cars and two wheelers may go back to 12 percent, increasing the OTR prices by a good margin as the companies will pass the increase to customers.

Although the Society of Indian Automobile Manufacturers has recommended the government to no roll back the stimulus package. Also, the government plans to move towards GST (Goods and Services Tax), where a uniform duty structure is applied to all goods and services. It doesn’t really make sense to increase the duty on cars to 12% only for a short period of time. The move is only going to unsettle the industry and make the manufacturers reword their strategy which hovered around the 4-meter, 1.2-litre petrol and 1.5-litre diesel specifications for some years.

The Automobile industry in India is doing well, with a registered growth of 30% in 2010 over 2009. The growth in January 2011 is 23.4% over January 2010. Bike sales have jumped 25.4 per cent year on year. But a dip in demand owing to high prices may dampen the growth.

Auto Industry expects the Budget to lower corporate tax rates, lowering of the minimum alternate tax or MAT to 15 per cent and a speedy introduction of the GST.

A slowdown at a time when global companies are focusing on India could also put off investments and fresh hiring.

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