Car prices set to zoom

Centre to roll back excise sops

New Delhi: The prices of cars and two-wheelers are likely to rise soon. The excise duty concessions for the auto sector will be withdrawn from January 1. This could mean excise duty on cars, SUVs and two-wheelers going up by 3-6 per cent. In June, the Narendra Modi government extended the excise duty concession by six months to December 31.

Carmakers had asked the government to extend excise duty relief, saying removal of this incentive could impact car sales. Maruti Suzuki India chairman RC Bhargava had earlier said the withdrawal of excise benefits could hike automobile prices by up to 4 per cent.

If the concessions are not extended, the excise duty on small cars, scooters, motorcycles and commercial vehicles will go up from 8 per cent to 12 per cent. On SUVs, it will be increased from 24 per cent to 30 per cent. For mid-sized cars, the duty will be hiked from 20 per cent to 24 per cent and for large cars, from 24 per cent to 27 per cent.

Earlier, in February, the UPA government had cut excise duty on cars, SUVs, two-wheelers, capital goods (heavy machinery) and consumer durables in the interim budget to help the industry tide over a demand slump. The incentive was applicable till June 30 and later extended till December 31 by the Narendra Modi government.

After two successive years of sales slump, the auto industry had shown some growth posting a growth of 10.01 per cent in April-November period this fiscal at 1.33 crore units as against 1.21 crore units in the year-ago period.