The Hindu Business Line : Auto components industry voices concern over excise

According to Mr A.K. Taneja, President of the Automotive Component Manufacturers Association (ACMA), there is a two-fold problem that is not only resulting in increased prices for the end consumer, but also threatening the livelihood of the small-scale industry.

Firstly, auto components sold in the retail market are being subjected to an excise duty on MRP with an abatement rate fixed at 33.5 per cent. This has resulted in an increase in prices in the after market and there is still lack of clarity about how competitive the new prices would be vis-à-vis imported components. ACMA, in a representation to the Ministry of Finance, has asked that the abatement rate be increased to 45-50 per cent.

Negative impact

Further, in a move that is viewed to negatively impact the small-scale industry, the Government in a notification has said that branding, labelling and repackaging of auto components would now be considered as manufacturing.

Small-scale manufacturers sell products to larger players to package and label. However, the larger players will now have to pay excise on these products, which were earlier free from excise. "There is no advantage for a marketing company now to source from the small-scale sector. As a result the smaller players will suffer," Mr Taneja said.

According to Mr Taneja, the move is also inconsistent with terms negotiated in the FTAs that the country has signed.

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