Fuel products contribute 60 pc of central excise revenue
Sunday, 27 March 2011
27 March 2011;deccanherald.com:New Delhi: Fuel and petroleum products have contributed about 60 per cent of the government's total revenue from excise in 2009-10, a report by CAG has said. The Centre's total collection of excise duties was Rs 1.02 lakh crore in 2009-10. As per the CAG report, while motor spirit account for 24.12 per cent of the government's total excise revenue, refined diesel oil with a share of 22.49 per cent, other mineral oils at 12.16 per cent and furnace oil with 2.38 per cent. The combined revenue from all the above mentioned categories makes fuel and petroleum the largest conributor to central excise revenue at over Rs 58,200 crore in the 2009-10 fiscal, the 'Compliance Audit Report (Indirect Taxes-Central Excise)' of CAG tabled in Parliament said. In 2009-10, the revenue from motor spirit was Rs 24,809.46 crore, the highest among all the items. In the second place was refined diesel oil which contributed to Rs 23,130.05 crore, the Comptroller and Auditor General said. All other mineral oils and products cumulatively fetched Rs 12,510.37 crore, while the share of furnace oil was Rs 2,445.72 crore in the excise revenue during the fiscal. Other major contributors to excise duty were cigarettes and cigarillos with a share of Rs 9,310.24 crore (or 9.29 per cent), iron and steel at Rs 8,479.16 crore (8.24 per cent), cement at Rs 5,185.10 crore (5.04 per cent), and motor cars and other motor vehicles at Rs 3,958.34 crore (3.84 per cent). Interestingly, among the 15 commodities that contributed to over Rs 1,000 crore in excise duty, eight reported a fall in their total collection in 2009-10 as against the figure of the previous fiscal. However, revenue from motor spirit and refined diesel oil were up by 17.71 per cent and 7.40 per cent, respectively, year-on-year. Collections from furnace oil also went up by 14.54 per cent.
25 March 2011;timesofindia.indiatimes.com:Saurabh Sinha:NEW DELHI: Keeping cash-strapped Air India airborne is now proving to be an uphill task for the government. Almost four months after putting it on cash-and-carry, oil marketing PSUs have warned that jet fuel supply to the Maharaja could soon be stopped unless their daily bill is cleared in full. According to sources, the Air India-Indian Airlines combine's daily aviation turbine fuel (ATF) bill has now shot up to Rs 18.5 crore due to successive hikes in crude prices and it has dues of about Rs 2,400 crore. Following mounting dues, AI's credit facility was withdrawn and it was put on cash-and-carry last December. With oil PSUs say they are under severe stress following recent spike in crude price and that AI must pay up, cabinet secretary K M Chandrasekhar has called a high-level meeting of the aviation and petroleum ministries on Friday. The objective is to find a middle path that could prevent the national carrier from getting grounded and also protect the oil companies' interest. "AI has been paying Rs 13.5 crore daily while oil companies have warned that their daily bill of Rs 18.5 crore must be cleared or else they will soon stop supply to AI. But the airline is in no position to pay more as sometimes the daily fuel bill itself is more than the daily earning. We are unable to pay salaries on time. The situation is very serious and the cabinet secretary has called a meeting on this particular issue as also the liquidity crisis in AI," said an official. Aviation minister Vayalar Ravi has taken up this issue with his petroleum counterpart S Jaipal Reddy. But considering spiralling crude prices that have put oil PSUs under severe strain, the oil ministry is yet to relent for AI. While the most serious threat, that could lead to AI being grounded, over non-payment of dues is coming from oil companies, there are a host of other vendors who have been asking for payment. These include spare parts and IT service suppliers. The privately run metro airports are paid from time to time to run operations from there. Controlled by the aviation ministry, the Airports Authority of India (AAI) has been asked to keep quiet on its dues of over Rs 600 crore from AI. With combined losses of over Rs 13,000 crore along with high cost debt of almost Rs 40,000 crore, AI's financials are proving to be too tough to be revived. The airline got Rs 2,000 crore as equity infusion last fiscal and may get a similar amount in 2011-12. Recently, the government admitted in Parliament that the airline earns Rs 36 crore a day and loses Rs 57 crore-a daily loss of Rs 21 crore.
24 March 2011;business-standard.com:Sharmistha Mukherjee:New Delhi: With Japan still reeling under the March 11 earthquake and subsequent tsunami and nuclear crisis, auto makers in India are looking at other countries where Japanese suppliers have facilities, to source raw materials and components and prevent a slowdown in the world’s second-fastest growing automotive industry.Though all major Japan-based original equipment manufacturers (OEMs) claim the twin disasters are not likely to affect operations over the next few weeks, concerns persist on raw materials and components, once the buffer stocks are exhausted. “Some OEMs have initiated talks with facilities of Japanese suppliers in other countries to source components,” said an industry source. Auto Component Manufacturers Association (ACMA) President Srivats Ram agreed: “A considerable proportion of sourcing is done from suppliers in Japan by Indian automobile manufacturers. Most of them have inventory for the next two to four weeks. However, beyond that contingency plans have to be put in place, if production fails to resume normally in the country.” “The issue is that even if a supplier is unaffected, the sub-supplier should be able to source materials to him. No one has a clear picture of the extent of damage in Japan. Even if OEMs talk to supplier facilities in other countries, the unit has to have surplus capacity to deliver orders,” said a senior executive at an industry body. With disruptions likely to persist in rationing power to the industry, after the meltdown of the nuclear plants in Fukushima, production work is unlikely to resume normally for some time in Japan. Delayed consignments of components stand to affect automobile production in India as well. V G Ramakrishnan, senior director, Frost & Sullivan, said, “Electronic parts for the automotive industry are heavily imported from Japan. Even if factories resume production work, availability of power is a matter of concern for industries there. Companies like Maruti, Honda and Toyota who account for over 50 per cent share in the Indian market, all have suppliers there. If Maruti faces disruption in supply, there would definitely be a slowdown in the automotive sector in India.” Toshiba, which manufacturers liquid crystal displays for automobiles, has suspended operations at an assembly unit for a month to repair damaged machineries. A senior executive at a Japan-based auto manufacturer said, “We have several hundred suppliers in Japan. Even if there is shortage of a single component, we would not be able to complete manufacturing a car. It would take us a while to figure out the impact of the disasters on all our vendors.” According to data available with ACMA, components worth over $1.2 billion are imported by Indian automobile manufacturers every year from suppliers in Japan. India is projected to import components worth around $10 billion in this financial year. Leading auto makers like Maruti Suzuki India (MSIL), Toyota Kirloskar Motor (TKM), Nissan Motors and Honda Siel Cars India source components directly or indirectly through vendors from Japan. The country’s largest car manufacturer, MSIL, sources 10 per cent of its component requirement for production directly and an additional 10 per cent through vendors from Japan. MSIL Chairman R C Bhargava said, “If the situation does not improve in Japan, we would have to consider air freighting supplies.” TKM Deputy Managing Director Sandeep Singh said, “We have stocks till the end of this month. We are assessing the situation. There would be no disruption of manufacturing process in India at present.” Executives at TKM said 21 plants of the parent company, Toyota Motor Corporation (TMC), resumed production on Monday. Toyota had shut all its 28 plants after the earthquake. TKM largely sources engines and transmissions for Etios sedan from TMC. Honda has once again suspended production till March 27. Nissan Motor Corporation has resumed partial operations at five of its plants in Japan and vehicle production is set to start tomorrow.
23 March 2011;deccanherald.com:New Delhi: An inter-ministerial committee (IMC) on Wednesday recommended the need to bring about price parity between expensive imported LNG and cheaply available domestic natural gas by making consumers of indigenously produced gas to pay more. The recommendation emerged at the first meeting of the newly constituted IMC held here. The IMC, headed by the Planning Commission adviser (energy), has been mandated to work out a mechanism for averaging out the price of costlier imported LNG with cheaper domestic gas, sources said. Though most members on the IMC agreed to the need for making bulk consumers of domestically available natural gas, like power and fertiliser industry, to pay more, a Power Ministry representative expressed “reservations” over enhancing user charges of indigenously produced gas, sources said. More talks needed The Power Ministry suggested more discussion on the mechanism to average out or pool price of costlier imported LNG with cheaper domestic gas. Since the government will take a final call on hiking the user charges of domestically available natural gas, the Power Ministry suggested that further discussions were needed to study the likely impact of such a move on various key segments of industry like power and fertilisers, which are bulk users of natural gas, sources said. Apart from a Power Ministry official, the IMC includes representatives from the Ministries of Finance, Petroleum and Fertilisers and Chemicals. The Gas Authority of India Ltd chairman, the Petronet LNG chief executive officer, the Petroleum and Natural Gas Regulatory Board secretary and the Oil and Natural Gas Corporation director (finance) are also members of the IMC. The committee was constituted after Petronet LNG—the country’s largest liquified natural gas importer—contracted LNG from Australia at a price four times the rate at which natural gas produced from domestic fields is sold. Petronet LNG was formed as a joint venture by the Centre along with private players to import LNG and set up LNG terminals in the country. The composition of the IMC has drawn criticism. Petronet and GAIL, which is a promoter of Petronet and principal marketer of the Australian LNG, are naturally inclined towards price pooling.
Luxury cars to be costlier despite CKD custom duty cut: Experts
Wednesday, 23 March 2011
24 March 2011;dailypioneer.com:New Delhi: Luxury car prices will rise but not as high as expected thanks to the halving of customs duty to 30 per cent on completely knocked down (CKD) kits for pre- assembled engines, gearbox and transmission, according to experts. “It (the decision to lower duty) will definitely provide a relief to the automobile industry. Although the prices of luxury cars will rise, it will not be as steep as it would have been earlier,” KPMG Executive Director Pratik Jain told the news agency. He was responding to Finance Minister Pranab Mukherjee’s decision to reduce the basic customs duty from 60 per cent to 30 per cent on CKD kits containing a pre-assembled engine, gear box, transmission assembly imported for the manufacture of vehicles. Although the other CKD parts continue to attract customs duty of 10 per cent, for the specified parts of pre-assembled engine or gearbox or transmission, it became 60 per cent. MS Mani, Indirect Tax expert at Deloitte India said the partial withdrawal of the sharp increase in customs duty will “largely benefit luxury car manufacturers and customers wanting to buy these cars”.
23 March 2011;business-standard.com:Sharmistha Mukherjee:New Delhi: Levies extra 25% tax; auto makers worried, say sales to be definitely hit. The prices of diesel cars in the capital are likely to increase sharply, with the city government today announcing an additional tax of 25 per cent on the existing tax rates for all diesel-propelled vehicles sold here. The Sheila Dikshit-led government appears to have taken a cue from last year’s Kirit Parikh group recommendation of an additional levy of Rs 80,000 on every diesel vehicle sold in the country. While clear estimates are not available as to the likely extent of price increase, car makers fear a negative impact on sales. There is no official data on the number of diesel vehicles sold every year, but industry estimates indicate nearly a third of all vehicles sold in the capital come from diesel variants. Diesel variants account for over 60 per cent of sales for models which offer the fuel option. This is the second fiscal blow for the auto industry in Delhi. The Union Budget tabled last month had proposed increasing the import duty on pre-assembled engines, gearbox or transmission mechanisms to 60 per cent from the earlier 10 per cent. In a concession, the Union finance Ministry said today a 30 per cent duty would be charged on these parts. Shashank Srivastava, chief general manager, marketing, Maruti Suzuki India , said: “The price differential between diesel and petrol prices has increased over the last one year. This in turn led to a spurt in sale of diesel vehicles. The proposed tax would definitely affect sales adversely.” While the price differential between diesel and petrol was Rs 9.70 in June 2010, it has more than doubled to Rs 20.62 at present. A litre of petrol costs Rs 58.37 in Delhi today, compared to the Rs 37.75 charged per litre of diesel. Maruti Suzuki offer diesel variants of compact cars Ritz and Swift, and sedans SX4 and Swift Dzire. Though the diesel versions are priced Rs 80,000-85,000 higher than the petrol variants, the company has seen overall sales for a model picking up on introduction of a diesel fuel option. As much as 65 per cent of the 31,000 units of these four models the company sells monthly comes from diesel variants. Vishnu Mathur, director general, Society of Indian Automobile Manufacturers, while conceding the move may impact the industry adversely, said: “We have not received the notification yet. We have to assess whether it will be applicable only on big cars or also on smaller passenger vehicles.” A senior executive of an auto company, who did not want to be identified, said the manufacturer did not see a drastic impact in sales immediately. “Over a fifth of overall vehicles sold every year in Delhi are diesel propelled. Our major sales for diesel variants come from Punjab and some of the southern states which are stronger diesel markets as compared to Delhi.” V G Ramakrishnan, senior director, Frost & Sullivan, said: “The levy would be a potential game changer for petrol vehicles sold in Delhi. The CNG distribution network is not strong in the capital and with price of diesel vehicles set to rise sharply, consumers would opt for petrol variants.” However, he added, since diesel cars and utility vehicles offer better mileage and the fuel is more cost-effective, the business class may continue to prefer diesel variants. While Hyundai Motor sells diesel variants of the I20 premium hatchback and the Verna sedan, General Motors has plans to launch its small car, the Beat, in a diesel version later this year.
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