The Hindu Business Line : Incentive structure for auto components sector sought

The Automotive Component Manufacturers' Association (ACMA) has suggested that in order to encourage investment in the auto components sector, the industry should be brought under the purview of an incentive structure similar to what exists in some of the competing countries.

The association in its pre-Budget memorandum has said that the Union Government should support the industry through policy mechanisms, and also try to benchmark its policies with competing countries such as Thailand, Malaysia, China and so on.

Specific tax incentives could also be offered for attracting investments in the area of auto-components such as a tax holiday for auto-component industry for investments exceeding Rs 50 crore and automobile industry in excess of Rs 500 crore (as given to power projects, firms engaged in exports, EOUs, infrastructure projects and so on).

Giving the example of Thailand, ACMA said that countries such as Thailand offer large incentives to companies for investing in component manufacturing, including corporate income tax holiday for eight years, customs duty exemption on machinery import, and customs duty exemption on raw material import.

The association has further urged that the inverted duty structure arising from the Thai FTA should be corrected.

It has also recommended a lower excise duty on small cars and two-wheelers.

"If the general excise duty on cars is reduced to 16 per cent, then excise on small cars, two-wheelers and components should be lowered to a level lower than 16 per cent, preferably to 8 per cent," the association said.

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