Auto parts sector seeks 10% excise duty

The auto components industry, on Monday, has asked the Government for continuation of 10 per cent excise duty.

With the excise duty concession on auto components expiring on December 31, 2014, the tax rate has gone up again to 12 per cent.

In a representation to the Finance Ministry for Union Budget 2015-16, the Automotive Component Manufacturers Association (ACMA) said such support would help their ambition of growing exports to $35-40 billion and build overseas revenues of $20-22 billion over the next five years.

According to ACMA, the industry aims to cross the $100 billion mark (turnover) and to have at least five Indian suppliers amongst top-global-hundred by 2020. “We expect the forthcoming Budget to lead to creation of a favourable and stable policy environment to boost industrial revival and enable growth in domestic auto sector,” said Ramesh Suri, President of ACMA.

The auto sector faced one of the most trying times in the last fiscal — flagging vehicle sales, high capital cost, high interest rates, fluctuating exchange parity, slowing down of investment and infrastructure challenges had adversely impacted the growth of the auto component industry, it said.

It has also recommended for early implementation of GST/phasing out CST and till such time the GST is implemented, CST be reduced to one per cent from existing two per cent.

Due to power shortage, manufacturers have to resort to generating their own power through gen-sets, thus, increasing the cost of production. Therefore, it said such manufacturers be allowed to avail input credit on diesel procured for internal power generation.

“The current depreciation rate on capital goods should be enhanced to 25 per cent from 15 per cent. Further, domestically manufactured capital goods be allowed 40 per cent depreciation.

This will encourage capital investment in the industry,” it added.

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