Indian automobile sector to be benefited by 2011 Budget

India's auto mobile sector is quite elated with the budget which is announced today by Pranab Mukherjee, India's Finance Minister. On the other hand a hike was expected however, the Finance Minister has spared it from any other change. And this has come as a respite after the increasing commodity prices.

The other announcement for the car manufacturers and auto part supplier is reduction in the custom duty on the raw steel. The steel prices are decreasing which will greatly benefit the suto industry, as it will become cheaper to purchase finished steel from the 2 and 3 tier suppliers.

The Finance Minister has encouraged Green car and technology as he declared a National Mission for these cars for promotion and also incentivize the new technology. However, the parts and assemblies are required to develop the hybrid cars, it will be exempted from the basic custom duty which is 10 per cent and also special CVD. Also 5 per cent concessional excise duty will be given to the hybrid cars if developed locally. The excise duty on the kits which are used for conversion of the fossil fuel cars into the hybrid cars will be decreased to 5 per cent from 10 per cent.

In the earlier budget a reduction of 4 per cent Central Excise duty was given to the specified parts of the electrical cars. But in this year's budget a reduction has been extended to the imported batteries also for the replacement market. The Hydrogen/ Fuel cell technology is also far from the mass usage but the budget is eyeing for the future technology, these cars will gain a reduction of 10 per cent in the excise duty. Central Excise duty on the LED lights excise duty has been decreased to 5 per cent along with special CVD which is fully relieved.

This years budget has extended a helping hand towards the growth in the environment conservation by encouraging the manufacturing of more nature friendly vehicles for the domestic auto industry. The efforts taken by the Indian government is to encourage the future technologies and benefit the sector.

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