How long is small? If that sounds like a conundrum, views of different stakeholders in the automobile industry are equally ambiguous.
NEW DELHI: How long is small? If that sounds like a conundrum, the views of different stakeholders in the automobile industry are equally ambiguous.
According to the Auto Mission Plan (AMP) released by Prime Minister Manmohan Singh on Monday, small cars should be defined as cars up to 3.8 metres in length with no engine specification.
At present, small cars have been defined as vehicles which are up to 4 metres long with engines up to 1200 cc (petrol) or 1500 cc (diesel) and fall in the lower excise bracket of 16%.
The AMP definition of small cars comes even as the apex auto industry body, the Society of Indian Automobile Manufacturers (Siam), has said in its pre-Budget recommendations to the government that excise duty on all vehicles should be brought down to 16%, with small cars being further incentivised but has made no mention of how long should a small car be.
But with the heavy industries ministry biting the bullet just a few weeks before the Budget — and sticking to the small car definition contained in the Auto Policy 2002 (3.8 metres in length) in the AMP — it remains to be seen whether the finance minister makes any changes at all in the excise regime for automobiles.
The FM has three alternatives: alter the length criterion without changing the engine specification parameters; alter the length criterion and remove all other specifications; or retain the 4 metres length criterion and remove all other parameters for a car to qualify for incentives.
If the FM brings all automobiles under the lower 16% bracket, then the present excise benefit enjoyed by small cars would vanish.
As of now, all hatchbacks except Maruti Swift (diesel and petrol), Hyundai Getz and GM’s Aveo UVA qualify for the lower 16% excise.
Says Hyundai India managing director H S Lheem, “Government should have a clarity on policy. Only last year, the length criterion was fixed at 4 metres and now there is talk of changing that. I will be meeting the heavy industries minister next week to discuss the issue (of length criterion for cars to qualify as small and thus get excise benefits).” Another prominent car maker feels the definition of small cars should be in accordance with the Auto Policy.
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