New Delhi: It seems that the woes of auto industry are not coming to an end. Despite the encouraging sales growth in last two months of the last financial year, the overall sales performances are not up to the expectations. The proposals in Union Budget 2012-13 to increase excise duty on cars and with rising fuel prices the industry is expected to be on sheen in next fiscal.

Amidst all this, automobile industry body SIAM on Wednesday hit out at the government for discouraging manufacturing of big cars in India by increasing excise duty while preparing to allow import of the same from Europe at a much lower duty. It has come at a time when the global trade agencies have already shown disapproval on the tax plan in the country.
The Society of Indian Automobile Manufacturers (SIAM) said while the government has increased excise duty on big cars to up to 27 percent in the Budget, it is considering cutting import duty on such cars from Europe to as low as 10 percent under the India-EU Free Trade Agreement (FTA).
"We are faced with a higher excise duty on cars other than small cars ostensibly because they are for the rich. This has resulted in India not developing strength in bigger cars," SIAM Senior Director Sugato Sen told.
He further added: "However, today we are hearing that government on India is thinking of allowing such cars (big ones) to come from the EU at lower import duty as part of the India-EU FTA. We don't understand the logic of such policy."
It is, however, understood that the government is not giving in easily to the demands of the EU.
"Concessions if any, by India on automobile sector will be dependent on the agriculture package negotiations," a source said.
India wants market access for its agriculture products in European markets. Both the sides are negotiating both these issues.
SIAM had earlier stated that it "understands from EU sources that India has made an offer to EU for reducing tariff of all cars" to 30 percent and "additionally a certain number cars (much more than what EU is exporting to India today) can be exported by EU at a highly reduced duty of only 10-15 percent".
In the Budget, excise duties for cars exceeding four metres in length but engine capacity less than 1,200 cc for petrol and 1,500 cc for diesel have been increased to 24 percent, from 22 percent with a fixed duty of Rs 15,000.
Moreover, the excise duty was hiked to 27 percent from the earlier 22 percent with a fixed duty of Rs 15,000 on cars longer than four metres but with engine capacity of over 1,200 cc for petrol and 1,500 cc for diesel.
However, the basic customs duty was hiked to 75 percent from 60 percent for fully imported vehicles priced over USD 40,000 and with engine capacity of over 3,000 cc and 2,500 cc for petrol and diesel driven vehicles.