CICU urges Union FM to slash excise duty on automobiles and auto components

Ludhiana, February4, 2013:Automobile Sector is one of the vital cause in the India’s wheels of progress. 

However, the actual growth in this sector during April to December’ 2012 has sharply scaled down with sales declining under following segments: Passenger Cars (-00.33%), MHCV Goods (-22.21%) and 3W Goods (-10.29%).

Further, consumer sentiments remained subdued leading to 13% fall in January’ 2013 Car Sales. 

In Exports too, there are worrisome signs with overseas sales of Auto Components Manufacturers expected to decline by a whopping 25% to around $5.5 billion in the current fiscal.  The Auto Components Industry employs one million people directly and another one million indirectly.  Not much can be cut down about fixed employees and costs.

The market continues to remain subdued due to Micro economic factors.  Given the sluggish market, there are instances where companies have cancelled investment in capacity expansion projects.  Finance cost is high, fuel prices remain steep, energy expenses have increased across states.  All these factors, have adversely affected demand and growth of automobiles in domestic and global markets.  This is also adversely impacting ancillary industry.  The Auto Sector which is struggling for survival is adopting more cautious approach in earmarking resources. 

Avtar Singh, General Secretary and Upkar Singh Ahuja, Joint Secretary, Chamber of Industrial and Commercial Undertakings (CICU), Ludhiana said that Automobile Sector is the main stay of our Industrial Economy and has been contributing significantly towards the gross domestic product and generation of employment avenues.  The need of the hour is to strengthen this sector, so that it can face challenges boldly.  Both of them have urged the Union Finance Minister to slash down Excise Duty on Automobile and Components from 12.36% to 8% and initiate appropriate measures to provide respite to this Sector in this hard time.  This support is indeed required to beat the challenges and maintain growth trajectory which will enable Automobile Sector to survive in local and global markets.  These measures in the upcoming Budget could impart a turnaround in the Automobile Sector.