Excise cut may kickstart 2, 3 wheeler market

NEW DELHI: Help’s on way for Nano-scared 2 and 3 wheeler makers. The Budget may drive in a special package for them. This could include a cut in 16% excise duty rate and cheaper loans. These segments have been spluttering, logging 10% fall in growth rates.

“The negative growth in the 2 and 3 wheeler passenger vehicle segment is a cause of worry for both the industry and the government. I have discussed the matter with the finance minister and he has given a favourable reply,” heavy industries minister Sontosh Mohan Dev told ET.

Officials said the excise duty on the 2 & 3 wheeler segment may be lowered to 12%. But the slew of proposed car launches may put paid to car buyers hopes of relief in the Budget. Mr Dev said there is no need for rate cuts as low-cost vehicles, like the Nano, are expected to trigger a price war.

With the bankers coldshouldering the 2 & 3 wheeler segment, the department of heavy industries (DHI) is also planning to initiate discussions with the department of banking (DoB) to ensure easy accessibility of loans up to Rs 50,000 for 2 wheelers and up to Rs 1 lakh for 3 wheelers. “Easy loan for this segment would be a priority during our further discussions,” Mr Dev said.

“Some banks in the rural and semi-urban areas refuse loans for buying 2-wheelers, which is not in the interest of the industry, and we expect that the government would certainly take steps to tackle this problem,” Society of Indian Automobile Manufacturers (Siam) director general Dilip Chenoy said.

For the nine months to December 31, the sector is expected to post a negative growth of 6-7% while for the calendar it could be 10%. On the contrary, the car segment is growing at a rate of over 12%, spurred by easy credit facilities.