Excise duty cuts fuel sales

Interest rate cuts revived consumer interest in cars in India, industry officials said in July. A sustained reduction in excise duties since 2003 led to a 20 to 24% drop in car prices, fueling growth in the passenger car market. An excise duty drop to 24% in 2003 and 2004 led to a 27% growth in car volumes to 900,000 units. However, growth during 2005 to 2007 fell in spite of a 10% Gross Domestic Product (GDP) growth rate. Analysts said there was no excise duty reduction during the years indicating a direct correlation between the fiscal measures and car sales. In 2007 to 2008, a reduction in excise duty to 16% fuelled a 12% growth in car sales to 1.55 million units and sales in 2008 to 2009 was flat at 1.55 million units. (July 4, 2009)