More fuel rate cuts by states likely to boost demand for auto industry – The New Indian Express
NEW DELHI: Days after the central government announced the reduction of excise duties on retail fuel prices, several states, especially those led by the Bhartiya Janta Party (BJP), stepped forward and proposed a similar reduction in the value added tax it charges on fuel.
After this deduction, the price of gasoline was further reduced by Rs 8.7 per liter and that of diesel by Rs 9.52 in these States and Union territories. Auto industry experts said it was a welcome sign for the sector where two-wheeler sales have been hit hard due to rising fuel prices.
“Perhaps this is a great psychological victory. Fuel prices have skyrocketed and have had a chilling effect on demand. The total cost of ownership has become considerably high due to new regulations and rising prices. A further rise in fuel prices has further eroded feelings. Hopefully any reduction in fuel prices will strengthen consumer sentiment, “said Puneet Gupta, associate director at IHS Markit.
Mitul Shah, head of research (Institutional Equity) at Reliance Securities, said the reduction in fuel prices would benefit all categories of vehicles, including the price-sensitive two-wheeler industry. The rise in fuel prices and the increase in the prices of raw materials which led to consecutive price increases had a very negative impact on sales of two-wheelers.
The Union government on Wednesday reduced excise duties on gasoline by Rs 5 per liter and those on diesel by Rs 10 per liter to give consumers a break from record high retail fuel prices.
This announcement was accompanied by 22 states and UTs reducing VAT rates in different proportions.
This has led the BJP and its partner states to witness larger reductions in gasoline and diesel prices compared to Maharashtra, Delhi, West Bengal and others governed by other parties.