The duty for two-wheelers and small cars has been brought down to 12 per cent in the budget proposal, a move, two-wheeler manufacturers feel, that would lead to unfair competition. “Two-wheelers are used by the real aam admi (common man),” Hero Honda MD Pawan Munjal said at a conference with finance minister P Chidambaram, while seeking another cut in excise duty on two-wheelers. “The excise duty should be brought down to 8 per cent,” Bajaj Auto chairman Rahul Bajaj said.

Chidambaram, in his budget, proposed to reduce excise duty on small cars and two-wheelers from 16 per cent to 12 per cent. Assuring the industry that he would keep a close watch on developments in the auto sector, Chidambaram said he had kept the duties at the same level for auto and small cars “as they enjoyed the same duty in the last two-three years.”

Fearing competition from the Nano, which was unveiled at the Auto Expo in New Delhi in January, two-wheeler makers want excise duty on motorcycles and scooters be lower than the levy on small cars. Tata Motors is planning to launch its Rs-1 lakh car in October, which now attracts an excise duty of 12 per cent — the same as that for two and three-wheelers. Though two-wheeler makers have been vociferous in stating that the Nano would pose no threat to motorcycle and scooter segments, today’s volte face made it amply clear that they were feeling jittery with the car’s launch just six months away.

Responding to the demand of the industry that encouragement should be given for exports of two-wheelers, Chidambaram said government refunds excise duty on exports and added efforts could be made to expedite the process of reimbursements.