The Budget 2013 has got mixed reactions for increasing the excise duty on luxury cars, bikes and some SUVs which the car manufacturers claim will add on to their existing pressure due to certain factors like increase in fuel prices, higher labor cost, high input cost and inflation that has already made up with an expensive price tag in the market for the final product.
The finance minister Mr.P. Chidambaram has hiked the excise duty on imported luxury cars to 100 percent which was at 75 percent previously and 75 percent excise duty for bikes higher than 800 cc which was at 60 percent previously. The increase in excise duty has been imposed to push the luxury car makers to try and localize their luxury offerings as much as possible if they want to reduce costs without downgrading the quality and in-turn increase their sales figures.
Some SUVs have been proposed an increase in excise duty to 30 percent from 27 percent except for those that are registered as taxis.
From a prospective buyer’s point of view, a luxury car is already an expensive affair; because of its high price tag that the car maker imposed by adding up all their expenses such that they don’t incur into loss, high rate of interest for finance option by banks and most luxury cars are fuel guzzlers and with the increase in fuel price it will not work out on a daily basis.
However for Electric Vehicle manufacturers in India, the Government has extended the current concessions on specified parts of electric and hybrid vehicles till March 31, 2015 in order to increase the production and sales of electric vehicles.