Excise duty concession for small cars or price reduction will definitely encourage people especially small families to replace their high end (cost wise) two wheelers with four wheeler option ,but our roads are so good in condition that it can bear the huge traffic jams? Are we competent enough infrastructure wise that we can handle high demand situation indigenously.so matter of fact is to realize the forth comming circumstances before giving such a lucrative offer.
whenever there is a excise duty cut is announced, the car makers immediately announce a cut in prices so as to create an impression that these are all passed on to the customers. After a few months, we have seen them increasing the prices of the cars citing one reason or other. Thus not only does the excise cut goes into the car makers kitty also they make money by increasing the prices many times in a year. Considering the chaos which is there on the indian roads, govt should instead consider hiking the excise duty to see if it can be a solution to the increasing traffic problem in the country.
India is heavily dependent on Imports for petroleum. The purpose of giving excise duty concession for small cars is that the public should go for fuel efficient cars, thereby saving petrol and diesel. Therefore, the definition of small car should be linked to the fuel efficiency. If you define the minimum mileage (km/litre), indirectly there will be a cap on the cubic capacity. If a car manufacturer offer their bigger model with the same fuel efficiency compared to a smaller car of their rival (say Tata Indica with the same fuel efficiency as Maruti Alto), why to discourage them?
