Passenger vehicles may get costlier after duty hike

New Delhi: After a good December-January period when sales of passenger vehicles saw a surge in demand, those who wish to buy a car or a motorcycle may have to shell out more as the government on Monday announced to hike customs duty on some auto parts from 10 per cent to 15 per cent.

The 5 per cent increase in duty applies to safety glass comprising toughened (tempered) or laminated glass, parts of electrical lighting and signaling equipment, windscreen wipers, defrosters and demisters (of a kind used for cycle or motor).

Other automobile parts that will see an extra 5 per cent duty hike include ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships, instrument panel clocks and clocks of a similar type for vehicles, aircraft, spacecraft or vessels.

The Automotive Component Manufacturers Association (ACMA), the apex body representing India’s auto component sector, said that an increase in basic customs duty on select auto components will encourage local manufacturing of such items.

“It is also heartening that the Budget outlay for the MSME sector has been doubled compared to last year. The auto component industry is dominated by MSMEs and this will provide them the necessary succour as the industry recovers,” said Deepak Jain, President, ACMA.

Jeetender Sharma, Founder and MD, Okinawa Autotech, said that the increase in customs duty on automobile parts would rightly encourage domestic manufacturing.

He, however, urged the government to look at reducing the GST and reconsider the current taxation framework applicable on raw material and the final product in case of EVs, which could have provided the much-needed impetus to the industry.

“The government could have also looked at aggravating the domestic demand by further incentivising individual and commercial consumption of EV pan-India,” Sharma said.

Sales of passenger vehicles increased by 13.59 per cent in December 2020, according to the data released by the Society of Indian Automobile Manufacturers (SIAM).

A total of 2.53 lakh passenger vehicles were sold in December compared to over 2.22 lakh units sold during the same period of 2019.

Two-wheeler sales also improved by 7.42 per cent on a year-on-year basis to 11.28 lakh units during the period under review.