In a move that might reduce car prices and grow falling sales, India’s finance minister has announced a proposal to reduce factory duties on vehicles, with small cars now taxed 8 % from 12% and SUV’s 24 from 30%.
Finance Minister P. Chidambaram announced it has introduced the proposed reductions in its interim budget, with small cars, two-wheelers and commercial vehicles at 8%, medium-sized cars at 20%, large cars and SUV’s at 24%.
“This has been an industry, which has been struggling, so from that point of view it’s a good signal and hopefully we will get some bit of positive sentiment back,” said VS Parthasarathy, chief financial officer at Mahindra. “This industry has been on negative growth trend for some months, so hope that this helps it turn around the corner,” he added.
After the announcement of the proposal, shares at all automotive companies in India were up, with those in Mahindra and Mahindra Ltd, India’s largest utility vehicle maker, up 1.8% and at Hero MotoCorp Ltd, the largest two-wheel maker, jumping 4 %.