Bangalore: Stung by the Union Government's decision to slash excise duty on small cars, which will make them cheaper, global manufacturers of mid-sized and large cars have sought the "same incentives" to prevent "distortions" in the Indian market.

Arvind Mathew, Managing Director, Ford India Private Limited, said: "We look forward to a level playing field as soon as possible before this measure has a serious distortionary impact on the Indian auto market. Global manufacturers need the same incentives if they are to participate more actively in the growth of the automotive industry in India."

None of the Ford models sold in India, such as Escort, Ikon, Mondeo, Endeavour and Fusion, is eligible for cost benefits arising out of the duty cut, and they may see a drop in sales or a flat growth rate in sales as demand for small cars increases.

Manufacturers of large cars have expressed "concern" over the duty cut and said that in the long term, the policy decision may curb overall industry growth and foreign investment, both of which are detrimental to building a globally competitive India. "At first glance, this looks like a win for the Indian consumers and the auto industry, but when you analyse the bigger issues, the excise duty reduction on small cars could ultimately weaken India's position. It does not send a positive signal to global auto manufacturers such as Ford, who have invested in India and created jobs," Mr. Mathew said.

In his budget speech, Union Finance Minister P. Chidambaram said: "I am confident that industry will seize the opportunity to make India a hub for the manufacture of small and fuel-efficient cars," Mr. Chidambaram said.

Mr. Mathew said this is "confusing" for manufacturers such as Ford. "Currently, India is not exporting these cars and has few free trade agreement opportunities from which to increase exports. This will raise the level of competition in the country," he added.

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