Budget 2001: Full Coverage

The price of the Hyundai Santro will also go down by Rs 18,000 and Accent byRs 34,000. The Santro LE costs Rs 3.43 lakh in Delhi.

Ford India will reduce the prices of all variants of Ikon by Rs 29,000 to Rs40,000, according to a company spokesman.

Manufacturers are trying to sort out the problem of old stocks with theirdealers.

"We are in talks with our dealers and will have to give an incentive for thestocks lying with them," MUL managing director (MD) Jagdish Khattar told TheFinancial Express.

The automobile industry is, however, concerned about the lack of increase inthe basic customs duty on two wheelers with the removal of quantitativerestrictions from April 2001.

"The domestic market will be flooded with two wheelers from China and Koreaon account of cheap imports," Venu Srinivasan chairman and managing director(CMD) TVS Suzuki said adding, "we will be raising the issue with thegovernment".

Similarly, the effective rate of import duty on second hand cars, MUVs andscooters comes to around 180 per cent, which is not substantially higher tocheck their imports into the country and thus does not protect domesticindustry.

Tata Engineering executive director Ravi Kant said: "The government hasrealised the importance of the industry as the key lever, because of itscascading effect on the whole economy."

Further, in case of passenger cars and two wheelers, reduction of exciseduty will fuel demand, while in commercial vehicles by laying heavy emphasison road construction including rural road infrastructure would also generatedemand. Removal of ban on inter-state movement of food grain and increase indepreciation rate will also boost road transportation and thus the autosector as a whole. Tata Engineering, being present in two out of threesegments should benefit from this.

The industry feels that the regulation of the second hand market withrespect to emission norms and safety standards was crucial and hoped thatthe proposed auto policy would address these issues.

Apex body SIAM said that the automobile industry's request for abolishingthe special surcharge on basic customs duty has been accepted. "The otherwelcome measure is the increase in depreciation rate for commercial vehiclesfrom 25 per cent to 50 per cent for the next fiscal," it says in a release.Fiat India MD MP Bianchi said that the duties levied on the import ofsecond-hand vehicles will encourage indigenous growth, with new modellaunches, product upgradation and better low environmental-impacttechnology.

Honda Siel Cars CEO T Fujisaki said: "Though we have not seen the fine printyet on the proposal to allow free imports of second hand cars, though at ahigher basic import duty, would act as a dampener for new car demand".Sona Koyo Steering Systems CMD Surinder Kapur said: "By lowering the exciseduty on passenger cars and two wheelers there will be a growth ofapproximately 20 per cent in 2001-02".

According to Bajaj Auto executive director Madhur Bajaj: "With reduction ofthe excise duty, there is good chance of operator price going down. However,it is not necessary for the industry to pass it down. On the other hand, itis also possible depending on the scale of operation, more than the cut canalso be passed. Further, accelerated depreciation will fuel demand in thecommercial vehicle sector.

Mahindra & Mahindra Ltd executive director, finance and corporate affairsBharat Doshi said: "National policy on agriculture and rural credit willusher in a good multiplier effect as demand is going to go up. This is avery positive indication for a company like ours. However,in the auto sectorwhere excise duty has gone down and rate of depreciation up, it is yet to beseen whether the same effect is experienced in multi-utility vehiclesegment."

Volvo India MD Ravi Uppal: "The steps would provide the much needed push forthe auto sector in the country. The budget ensured that post-QR, localindustry and agriculture, will not be subjected to exposure from globalmarkets."