The Union Budget 2011 brought lots of cheer for automotive sector and for EV/Hybrid vehicles in general.
The industry that has hit by high input cost, interest rates and higher fuel cost in recent past was nervous anticipating an increase in excise duty from present 10%. The industry has passed most of this cost to consumer and the last thing that it wanted is another hike that has to be passed on or get hit on margins. Due to the painful inflation India
The biggest relief the Auto sector got is NOT in hike in excise tax. All Auto sector stocks cheered to be back in green.
The biggest reform that has been proposed is for a green transportation. The budget has proposed a National mission for EV and hybrid vehicles, that is expected to elaborate the investment and road maps. In Dec 2010, government had proposed incentive program for Electric vehicles.
Below are some highlights of the union budget 2011
(Courtesy: Indian union budget website)
- Central Excise Duty to be maintained at standard rate of 10 per cent.
- National
Mission - Basic Custom Duty reduced for various items to encourage domestic value addition vis-à-vis imports, to remove duty inversion and anomalies and to provide a level playing field to the domestic industry. (To be know yet what are the items that would benefit)
- Full exemption from basic Customs Duty and a concessional rate of Central
- Excise Duty extended to batteries imported by manufacturers of electrical vehicles.
- Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
- Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehicles.
- Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles from 10% to 5%
- Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted.
- Out right concession to factory-built ambulances from Excise Duty.
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