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Mani's Reverse Gear Skids Automobile Sector in State

Even as Union Finance Minister P Chidambaram made a serious attempt to infuse life into the sagging fortunes of the automobile industry, his state counterpart has ensured that there will be no reprieve for the sector in Kerala.

Published: 21st February 2014 10:38 AM  |   Last Updated: 21st February 2014 10:42 AM   |  A+A-

Automobile-Sector

Even as Union Finance Minister P Chidambaram made a serious attempt to infuse life into the sagging fortunes of the automobile industry, his state counterpart has ensured that there will be no reprieve for the sector in Kerala.

When Union budget was presented on February 17, a reduction in excise duty for automobiles, including cars and SUVs and two-wheelers was announced, breathing some life into the industry facing negative growth. When Kerala Finance Minister K M Mani presented the budget on January 24, he imposed an additional road tax of 1 to 2 per cent, in sharp contrast to the Centre’s policy.

John Paul, managing director, Popular Motors, said that the automobile industry is hoping for a reduction in road tax when the full budget is presented in Kerala. The State needs a stimulus for the automotive sector and this was brought to the notice of the government by the dealers. But no relief was provided.

“The impact of the cuts in excise duty is expected to be reflect in the market within a day or two. However, the increase in road tax will be from April 1 this year and the real benefit for the customers will only for a short period,” he said. 

There will be a reduction of `8,000 to 11,000 for an Alto car and `15,000 to 50,000 for high-end cars. But the additional tax burden in Kerala will reduce this benefit from `3,000 for the Alto car and over `10,000 for premium cars.

Rajesh Nair, assistant general manager, Muthoot Honda, said that though the High Court has directed not to collect tax for the VAT, it seems that the additional tax was imposed to overcome it. However, when the industry was facing such a crisis, the state government should have also followed the footsteps of the Centre by announcing tax reduction.

 When the banks hiked the rate for vehicle loans, the 2013 sales figure for cars in India registering a 9.59 pc dip. As per the Union budget proposal, excise duty for small cars, scooters, motorcycles and commercial vehicles will come down to 8 pc from 12 pc and SUVs 24 per cent as against 30 per cent. Muhammed Ekbal, assistant general manager, Platino Classic, said the state could have waited for some more time to increase the tax.



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