Excise your mind

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So, Pranab Mukherjee, our honourable finance minister in his Union Budget increased duties on completely built units (CBUs) and made them far more expensive for the well heeled to purchase them. For instance, the Mini Cooper range is up by nearly Rs 7 lakh, a Range Rover Vogue or Mercedes-Benz G55 AMG are up by Rs 15 lakh, the Ferrari 458 Italia is up by Rs 46 lakh and the Lamborghini Aventador is up by Rs 90 lakh! That's nearly an additional Audi A8 if you please.

To think about it, the excise duties have come at a time when the European Union was keen on signing an FTA (Free Trade Agreement) with the Indian government and was hoping to slash the duties by half. Instead they find themselves saddled by another monumental task.

Is there anyone to blame? Honestly, not quite, if pure economics are under consideration. The Union Government's deficit numbers aren't looking good and any and every attempt at garnering more revenues should help the country. Besides, even if the FTA is signed in the forseeable future, the government stands to lose far less in excise revenue than it had originally envisioned/believed.

For the consumers, well, they may defer their purchases, but not for long as they get used to the new taxation and pricing structure. For the firms, I hope to see more cars under the Rs 50 lakh price bracket going the Completely Knocked Down (CKD) way as they try to become more relevant to their customers. If the grand vision by the government is to force these firms to bring their more expensive cars the CKD route, well it better forget about it. Of course, the debate whether the government utilises the collected tax for improved infrastructure, better roads, etc is for another place and another time.