The Hindu Business Line : Auto ind looking for measures in Budget to maintain GDP growth

AS IT gets drawn more and more into a volume-based play, broad measures to maintain GDP growth is what the automobile industry would like to see in the main, in the upcoming Union Budget.

Alongside, industry officials are also seeking a few specific fiscal concessions.

The emphasis on GDP is not hard to figure out, today's operating environment being characterised by high raw material costs and severe competition at the end-product level that disallows most companies from simply passing on every ounce of input cost escalation.

Overall economic growth, as denoted by GDP gain, provides an ambience for selling more products thereby spreading the cost increases over larger volume sales.

"It is imperative that the GDP growth rate is consistent between 7-8 per cent. The initiatives taken by our Government need to be implemented; especially investments related to infrastructure, reduction in duties and taxes etc. We need to push growth and maintain the consistent GDP growth,'' Mr Praveen Kadle, Executive Director (Finance & Corporate Affairs), Tata Motors, said.

The requirement to focus on infrastructure was highlighted by Mr Ravi Kant, Executive Director (Commercial Vehicles Business Unit), Tata Motors, as well. "Despite the fact that there was a slowdown in the beginning of this year, the Government's effort to accelerate road development should continue.

"This would bring about a huge change, not just in the truck and bus industry but also for the entire economy," he said.

Mr Uday Phadke, Executive Vice-President (Finance), Mahindra & Mahindra, was more specific. He felt a reduction in excise duty on passenger vehicles (having seating capacity of 13 or less) by removing the additional duty of 8 per cent and leaving only the basic 16 per cent duty in place, would be helpful. As would be, implementing the fiscal incentives for multi-utility vehicles stated in the Government's existing auto policy.

There is the need to extend for another three years the earlier announced provision for weighted deduction of research and development (R&D) expenditure, which is otherwise limited to March 31, 2005. "As we go forward, R&D will become more and more important," he said.

Given the current high-cost operating environment, Mr Phadke suggested extension of the principle of `set-off' to service tax. Also with Free Trade Agreements looking likely, it is necessary to reduce import duty on raw materials in such a manner that duty cuts on finished products do not adversely impact the competitiveness of domestic manufacturers, he said.

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