The auto component sector is looking forward to support from the government to achieve US$ 200 billion in turnover from existing US$ 38.5 billion, with exports ranging between US$ 80-100 billion from the current US$ 11.2 billion.
27 Jan 2016 | 2987 Views | By Autocar Pro News Desk
The Automotive Component Manufacturers Association (ACMA), the apex body for the Indian auto component industry, has stressed on the need for an early implementation of GST in its recommendations to the government for the forthcoming Union Budget for the year 2016-17.
The auto component sector is looking forward to ...
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The Automotive Component Manufacturers Association (ACMA), the apex body for the Indian auto component industry, has stressed on the need for an early implementation of GST in its recommendations to the government for the forthcoming Union Budget for the year 2016-17.
The auto component sector is looking forward to support from the government to achieve US$ 200 billion (Rs 12,63,400 crore) in turnover from existing US$ 38.5 billion (Rs 243,204 crore), with exports ranging between US$ 80-100 billion (Rs 6,31,700 crore) from the current US$ 11.2 billion (Rs 70,750 crore), as stated in the Automotive Mission Plan 2026, which is a collective vision of the government of India and the Indian Automotive Industry.
Commenting on the auto component sector’s expectations of the forthcoming Budget, Arvind Balaji, president, ACMA, said, “This year ACMA has adopted ‘Make Quality & Technology in India’ as its theme, which is in tune with the ‘Make in India’ campaign of the government of India. ACMA is committed to strengthening the capabilities of the component industry on quality, product development, improving technology to meet the changing regulatory environment, especially on emissions and safety, and customers expectations, among others. We expect the forthcoming Budget to lead to creation of a favourable and stable policy environment to enable growth and development of the domestic auto sector.”
Some of ACMA’s recommendations to the government are:
Early Implementation of GST / Phasing out CST: There is an urgent need to reduce multiplicity and complexity of applicable taxes through early implementation of GST.
Duty drawback should be reverted to FOB value basis from weight basis: The focus of the industry is to manufacture lightweight and fuel efficient products, which involves heavy investments in R&D. Many companies are not getting adequate duty drawback benefits, as the focus is to progressively reduce the product weight. ACMA, therefore, has recommended that the weight cap for engineering products should be waived off.
Expand list of tools for availing CENVAT Credit: Presently the provision is limited to jigs, fixtures, moulds and dies sent by a manufacturer to a contract manufacturer/job worker. This provision needs to be extended to include tools.
Permit 100 percent CENVAT Credit on Capital Goods in year of purchase
Allow input credit on diesel: Due to power shortage, manufacturers have to resort to generating their own power though gen-sets thus increasing the cost of production. ACMA has recommended that such manufacturers be allowed to avail input credit on diesel procured for internal power generation.
Service Tax - Credit on various services should be provided: Services like canteen, transportation of employees, repair and maintenance of commercial vehicles are directly related to manufacturing, therefore manufacturing units should be allowed to avail CENVAT credit on such services.
Direct Tax - Encouraging Research & Development: Presently a 200% weighted deduction under section 35(2AB) of the Act is available for in-house R&D facilities and 175% weighted deduction on outsourced R&D from approved institutions i.e National Laboratories, Universities, Scientific Research Institutes and IITs.
ACMA is keen that the 200% weighted deduction should be extended to R&D facilities, which are outsourced to third-party service providers or other institutions.
Enhancing depreciation rate on capital goods: The current depreciation rate on Capital Goods should be enhanced to 25% from 15%. Further, domestically manufactured capital goods be allowed 40% depreciation. This will encourage capital investment in the industry
Tax exemption on expenditure incurred on power from renewable sources: Tax benefits be made available to the users of green technologies to incentivise and popularise clean energy sources.