NEW DELHI (Reuters) -- India may extend excise duty concessions for carmakers beyond Dec. 31, a finance ministry source said today, as the industry continues to struggle with sluggish demand due to high interest rates.
"Car sales are down. The government could extend tax relief to the auto sector beyond Dec. 31," the source said on condition of anonymity.
The excise duty concessions, which were granted in February this year, will lapse on Dec. 31, if not extended.
India’s car market shrank last year by 8 percent to 2.55 million vehicles, returning to the level of 2011, after interest rates on car loans soared to about 12 percent in the midst of a currency crisis. Almost three-quarters of new-car sales in India are bought on credit.
Renault is one of a number of foreign carmakers seeking to get a foothold in India. The French carmaker is the best-selling European automaker in the market, buoyed by the success of its Duster SUV, which helped it sell 24,073 vehicles in the first half.
The carmaker has a market share of 2 percent compared with country's the No. 2 European brand, VW, which commands 1.6 percent of the market and third-placed Skoda, with a 0.6 percent market share.
Automotive News Europe contributed to this report