UPDATE 1Indian auto makers cheer tax cut plans
(Adds detail, comments)
MUMBAI, Feb 29 (Reuters) - Shares in Indian vehicle makers
rose on Friday after the government proposed to cut excise
duties in the fiscal year 2008/09, which analysts say will
encourage demand, particularly for small cars.
The finance minister proposed to cut excise duties on buses
and chassis, as well as small cars, to 12 percent from 16
percent in his annual budget.
He also cut duty on hybrid cars to 14 percent from 24
percent and on two- and three-wheelers to 16 percent from 24
percent.
“This is welcome news and will definitely boost the
two-wheeler industry,” said Mohit Arora, managing director for
India at research firm J.D. Power Asia-Pacific.
“It will also provide more momentum to the small car
sector, which was beginning to lose steam,” he said.
Shares in top car maker Maruti Suzuki India Ltd (MRTI.BO: Quote, Profile, Research),
which has about half the market with its mostly small cars,
rose as much as 3.8 percent to 867 rupees.
A spokesman for the company said it would announce price
cuts on some models to pass on the tax benefit to consumers.
Passenger car sales have grown at an annual rate of about
15 percent in the last five years, but more than two-thirds of
the market is for small cars, defined as up to 4 metres in
length and with an engine displacement of 1.2 litres for
gasoline and 1.5 litres for diesel. Continued…
