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Luxury vehicle manufacturers’ disappointed over move to hike cess ceiling

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Mumbai/Chennai, Aug 7 : Luxury vehicle manufacturers on Monday expressed their disappointment over GST Council’s recommendation to the central government for a hike in maximum cess ceiling leviable on luxury, sports utility vehicles (SUVs) among others.

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The Ministry of Finance in a statement said that decision to recommend a hike in the “maximum ceiling of cess” was taken at the Council’s meeting on August 5.

“The GST Council considered the issue of cess leviable on motor vehicles in its 20th meeting held on August 5 and recommended that central government may move legislative amendments required for increase the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 including SUVs, to 25 per cent instead of present 15 per cent,” the ministry said in a statement.

“However, the decision on when to raise the actual cess leviable on the same would be taken by the GST Council in due course,” it said.

The ministry revealed that the decision to recommend a hike in cess cap was taken after the Council noticed that post the roll-out of GST, the total tax incidence on motor vehicles had come down as compared to pre-GST regime.

On industry’s side, luxury car maker Mercedes-Benz India voiced its disappointment.

“We are highly disappointed with the decision. We believe this will be a strong deterrent to the growth of luxury cars in this country,” Roland Folger, MD and CEO, Mercedes-Benz India, was quoted as saying in a statement issued by the company.

“As a leading luxury car maker, this will also affect our future plans of expansion under ‘Make in India’ initiative, which aims at making and selling world-class products in India, with the latest technology for end-consumers,” he added.

Folger pointed out that the recommendation will reverse the positive momentum that the industry wanted to achieve with the introduction of the GST.

“With this hike in cess, we expect the volumes of the luxury industry to decelerate, thus offsetting any growth in the potential revenue generation that could have come with the estimated volume growth,” Folger said.

He also called for the need for a long-term road-map for the luxury car industry in India.

“The constant shift in policy makes our long-term planning for the market highly risky, and we think this would only have an adverse impact on the country’s financial ratings,” Folger said.

On its part, Audi India announced a sales offer on a range of models including Audi A3, Audi Q3 and Audi A4.

“Keeping in mind the proposed increase in cess, this is an opportune time to join the Audi family and additionally also benefit from the privileges of the Audi India club,” said Rahil Ansari, Head Audi India.

According to Shrikant Akolkar, Research Analyst- Automobiles, Angel Broking: “The likely hike in the cess rate from current 15 to 25 per cent is not expected to see a materially negative impact on the demand for the premium automobiles.”

“The underlying demand remains healthy which is the driving force for the automobile sector. We believe that companies will be able to pass on the cess hikes on luxury vehicles/UVs to customers by price revision.”

Further, Suresh Nandlal Rohira, Partner, Grant Thornton India LLP said: “The increase in compensation cess on luxury cars from 15 per cent to 25 per cent is purely an attempt of anomaly correction by the government on realising the revenue loss it would undergo.”

“Although, it would take away the luxury for higher segment car buyers with an additional tax burden of 10 per cent, however such frantic changes and corrections for each sector may convulse the confidence of the Industry and also lead to re-planning of their sales strategy and cost impact thereon.”

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INR vs USD Rupee slips 111 paise against US dollar

On the currency front, the Indian rupee weakened to 72.24 against the US dollar from its previous close of 71.34.

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Mumbai, Dec 11 : The key equity indices — S&P BSE Sensex and NSE Nifty50 — remained subdued during Tuesday’s morning trade session as the Congress party started to take the lead in the Assembly elections in three key states of Rajasthan, Madhya Pradesh and Chhattisgarh.

The key indices — the S&P BSE Sensex and NSE Nifty50 – had a gap-down opening and
subsequently shed over 500 points and 140 points respectively as investors were spooked on the surprise resignation of RBI Governor Urjit Patel on Monday evening.

According to market observers, heavy selling pressure in banking, oil and gas and automobile stocks.

On the currency front, the Indian rupee weakened to 72.24 against the US dollar from its previous close of 71.34.

At 10.30 a.m., the Sensex traded at 34,666.06 points, lower by 293.66 points or 0.84 per cent from the previous close.

The Nifty50 on the National Stock Exchange traded at 10,414.20 points, lower by 74.25 points or 0.71 per cent from the previous close.

“Indian markets opened lower in line with expectations following RBI governor’s abrupt exit on Monday evening,” HDFC Securities’ Retail Research Head Deepak Jasani told IANS.

“A recovery in the first few minutes of trade was based on initial trends from MP where BJP was faring better than Congress. However this proved to be short-lived as the lead of BJP narrowed soon,” he said.

He further noted: “Markets would swing till around noon based on leads positions in MP, as the other four states are showing clear winners.”

On Monday – the previous trade session – a global sell-off along with a rise in crude oil prices suppressed the key Indian equity indices deep into the red.

Consequently, the NSE Nifty50 had ended lower by 205.25 points or 1.92 per cent to 10,488.45 points, whereas the Sensex closed at 34,959.72 points — lower by 713.53 points or two per cent — from its previous session’s close of 35,673.25 points.

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Sensex at 34,458.86, down by over 500 points

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SENSEX NIFTY MARKET

Mumbai, Dec 11 : The key stock exchanges had a gap-down opening on Tuesday, with the S&P BSE Sensex losing over 450 points as investors were spooked on the surprise resignation of RBI Governor Urjit Patel on Monday.

Further, early trends of the Assembly election results in five states which showed a neck and neck fight between the Bharatiya Janata Party (BJP) and Congress in at least three also weighed on the sentiments.

At 9.16 a.m., the Sensex traded at 34,502.62 points, lower by 457.10 points or 1.31 per cent from the previous close.

It had opened at 34,584.13 against the previous close of 34,959.72 points on Monday.

The Nifty50 on the National Stock Exchange traded at 10,346.90 points, lower by 141.55 points or 1.35 per cent from the previous close.

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CFO arrest row: China denies Huawei poses security threat after EU warning

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Beijing, Dec 10: China on Monday strongly defended Huawei after a warning from the EU that the tech giant posed a security risk, amid an ongoing row over the arrest of its Chief Financial Officer (CFO) in Canada at the behest of the US.

In response to accusations by European Commission Vice President Digital Single Market Andrus Ansip, Chinese Foreign Ministry spokesperson Lu Kang said the government had never forced Huawei to install a covert access route on mobile phone units to control them.

“I want to emphasize that Chinese laws and regulations don’t allow any institution to force any enterprise to install a ‘backdoor’. The Chinese government always encourages its companies to abide by local laws and regulations,” Lu was quoted as saying by Efe news.

He reiterated Beijing’s demand of an immediate release of Huawei’s CFO Meng Wanzhou who was arrested in Vancouver on December 1 after the US accused the tech giant of selling equipment in Iran in violation of American sanctions.

Meng, who is also the daughter of the group’s founder and CEO, had a bail request rejected on Friday by a Canadian court.

EU’s Ansip said on Friday that the bloc should be “worried” about Huawei and other Chinese companies over the security risks they pose.

Ansip claimed that China was developing mandatory “backdoors” — malicious software that allows any phone unit to be accessed and controlled without the user’s knowledge.

In response, Lu said it was “ridiculous” to undermine the company based on “speculations”.

“We have noticed some people from certain countries keep saying that Huawei may threaten their national security. But they did not provide a single evidence,” the spokesperson said.

He stressed that the company had “won the trust of its partners” and signed agreements to build 5G networks with more than 20 countries, including Portugal, France and Germany.

The spokesperson also commented on Japan withdrawing Huawei and Chinese telecom giant ZTE from the government procurement list, due to alleged security breaches by the two firms.

“The Japanese Chief Cabinet Secretary (Yoshihide Suga) said the relevant regulations don’t aim to exclude the relevant enterprises or equipment. I want to stress that Chinese enterprises and cooperation in Japan is for mutual benefit,” Lu said.

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