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Budget pricing

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The 2009-10 budget presented by the Finance Minister, Pranab Mukherjee had very little for the auto industry to be ecstatic about. The Fin Min in his address announced three key changes towards policies for the auto industry. They include:

1. Revision of the cess on cars above 1,500cc to a blanket Rs 15,000, unlike the previous cess of Rs 15,000 on cars from 1500cc to 2000cc and Rs 20,000 cess on cars above 2000cc.

2. The government has reduced the excise duty on petrol trucks that are primarily used in urban areas for transport of goods from 20 per cent to 8 per cent, which is in line with current charges on diesel trucks.

3. Auto companies will now enjoy a weighted deduction of 150% on expenditure incurred on in-house R&D. This is of benefit especially to homegrown companies that have large R&D expenditures.

The industry on the whole isn't quite pleased with the outcome. For one, they were hoping the cess would be done away with altogether, while none of the mainstream truck manufacturers offer petrol powered trucks or even pickups so there is ambiguity regarding its true beneficiaries.

As usual there have also not been any changes in the duty structure towards CBUs (cars and bikes) and that continues to be the bone of contention among enthusiasts. Leaders from the auto industry are now pinning their hopes on a good monsoon and a positive consumer trend to drive sales in the coming financial year.