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Automobile industry associations on Monday have said it has urged the Finance Ministry for reduction of 10 per cent in GST rates for BS-VI vehicles from April 1, from the upcoming Budget, apart from incentive-based scrappage policy and also increase budget allocation for internal combustion engine (ICE) buses.
“We have urged the Finance Ministry to consider announcing an incentive-based Scrappage Policy and also increase budget allocation for ICE bus procurement by State transport undertakings. The increased cost of BS-VI may affect demand. Hence we have also requested the government to reduce GST rates for BS-VI vehicles effective April 1 from 28 per cent to 18 per cent,” Rajan Wadhera, President of the Society of Indian Automobile Manufacturers (SIAM), said.
Similarly, the Automotive Component Manufacturers Association (ACMA) reiterated the need for a uniform 18 per cent GST rate on all auto components in its recommendations for the Budget 2020.
Given the sector is challenged due to the prolonged slowdown, the industry association that represents over 850 companies in the auto component sector recommended, supportive measures that would enable the revival of automotive growth and a smooth transition to the next phase in the year to come, ACMA said.
“The automotive industry in India is undergoing a significant transformation due to new regulations and policy changes. On top of it, the economic slowdown has deterred domestic consumption, we hope that the forthcoming budget will help uplift both the consumer and industry sentiments,” Deepak Jain, President, ACMA said.
Some of ACMA’s recommendations for the Budget include Technology Development & Acquisition Fund for supporting R&D and indigenous technology development; Incentivising R&D Spend to encourage domestic R&D and testing; MSME Definition as a new MSME definition will allow larger number of companies to avail government incentives; and Investment Allowance - allowing at least 15 per cent for manufacturing companies that invest more than Rs.25 crore in plant and machinery.
“The auto component industry contributes significantly towards employment generation and exports. To meet the government’s vision of a $5 trillion economy by 2025, of which the manufacturing industry would be $1 trillion, it is critical that steps be taken to get the automotive industry back on track,” Jain added.
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