How small is a “small” car? This conundrum remains unresolved, with Auto Mission Plan launched last year and the govt giving different definitions of it.
NEW DELHI:
How small is a “small” car?
This conundrum remains unresolved, with the Auto Mission Plan (AMP) launched last year and the government’s excise policy for small cars giving different definitions of what constitutes a “small” car.
This confusion has forced the Centre to delve into the tricky issue once again, ahead of discussions with the industry next month in preparation for the 2008-09 Budget.
Sources said the ministry of heavy industries has begun consultations with other concerned ministries on aligning the small car definition to that contained in the AMP.
“The thinking right now is that the definition for small car in the AMP should stay. But this issue can be revisited … we will talk to other concerned ministries again,” sources said.
The AMP defines a small car as being only up to 3.8 metres long, with no engine specifications.
But for excise purposes, the Centre, at present, classifies cars up to 4 metres in length and with 1200 cc petrol or 1500 cc diesel engines as “small”. Consequently, such vehicles are charged only 16% excise levy whereas cars longer than 4 metres are charged 24%.
This dichotomy remains despite several car makers voicing their opposition; even the apex automobile body - Society of Indian Automobile Manufacturers (SIAM) - has maintained that the small car should be defined as per the AMP.
Meanwhile, failing to get their pleas heard by the Government, many passenger car makers have already tweaked vehicle length and even tinkered with the engine displacement for new launches to qualify for the lower, 16% excise.
But many others - largely those companies which sell sedans and bigger cars - have been left sulking by the government’s small car fetish. The companies that have impending mega launches lined up stand to gain the most if the various stake holders arrive at a consensus on the small car definition.
But the move to revisit the small car issue comes even as the heavy industries ministry has already begun a detailed study to determine the impact of lowering the maximum excise slab for all automobiles to 16%. At present, two and three wheelers also fall under the 16% bracket along with “small” cars.
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