Union Budget 2012 – Basic Excise Duty Goes up by 2% – Motorcycle Prices Goes Up

Get ready to pay more for a new two wheeler as there is excise duty hike in Union Budget 2012. The basic excise duty has been hiked from the 10% to 12% in union Budget 2012. Many two wheeler manufacturers have passed this excise duty hike to end customer as they are already facing high input cost pressure with an immediate effect. Manufacturers also fear that new hike will slowdown the growth in two wheeler segment which has been already tapered in recent months.

India’s largest scooter manufacturer, HMSI has already increased its Activa model price by Rs. 826 – 996. Similarly the motorcycles prices have also been increased in the range of Rs. 883 to 3,400 by HMSI. The company still has not taken decision with regards to CBR150R which it has just launched in the Indian market. TVS Motors has also follow the same path of HMSI and confirmed that it will increase its two wheeler prices with respect to hike in excise duty. The scooter range will see rise of Rs. 780 to 900 while the motorcycle range will see price hike of Rs. 780 to 1,580.

However, Bajaj Auto and Hero Motocorp, have still not decided anything. But, it seems that the both the company will also follow the suit and will increase two wheeler prices. The increase in excise duty of 2% was expected as the government reduced it to 8% from 12% in 2009 due to stimulus package. With the increase of 2%, now the excise duty is back in the region of 12%. The growth of two wheeler industry has came down sharply in recent months and with this increase in prices we may see further slowdown in the two wheeler segment.

– Mahavir Kothari