The Automotive Component Manufacturers Association (ACMA) has reiterated its demand for a uniform 18% GST for all auto components, besides a need for encouraging technology development & acquisitions.
The apex body of the Indian auto component industry, in its pre-budget proposals to the Government, has further pitched for increasing the rate of weighted deduction on R&D spend and called for a reduction of import duty on aluminium and steel.
Stating that since the entire auto industry is undergoing a technological transformation on emissions and safety front, enhancing spend on R&D and creating infrastructure for innovation are a must to enable the auto component industry to stay relevant, Vinnie Mehta, Director General, ACMA said, in a statement.
“Facilitating new product development through a technology development and acquisition fund besides enhancing the rate of weighted deduction on R&D spend are a need of the hour,” Mehta said, adding that reducing customs duty on raw materials, especially steel and aluminium alloys, which account for over 60% of the industry’s inputs will enable the sector to face increasing costs.
With a view to curb the grey operations in the aftermarket that comprises of secondary market of the automotive industry, related to the manufacturing, remanufacturing and retailing of vehicle parts, Mehta said, “The industry has significant aftermarket operations, which is plagued by grey operations and counterfeits due to the high 28 % GST rate. A moderate rate of 18% will not only address this challenge, but will also enhance the tax base through better compliance”.
Stressing on the need for a dedicated Technology Development & Acquisition Fund for supporting R&D and indigenous technology development for industry’s shift from to BS IV to BS VI, and for promoting electric mobility, the apex body chief said such a fund could also be utilised for in-house development or for acquisition and assimilation of technologies through licensing agreements, acquisitions etc.
The industry body has further sought Government’s nod over a new MSME definition that will allow more companies to avail government incentives e.g 25% corporate tax and allow for better GST compliance. As per the proposed definition, MSMEs are to be categorised on the basis of their annual turnover instead of investment in plant & machinery/equipment.
The auto components makers’ body also pitched for a provision to re-introduce investment allowance at 15% for manufacturing companies that invest more than Rs 25 crore in plant and machinery.
Riding strong volume growth across automotive segments. the Indian Auto-Component Industry showed healthy growth of 18.3% posting Rs 3,45,635 crore ($51.2 billion) turnover in the FY 2017-2018. While the exports of auto components registered a growth of 23.9% to Rs 90,571 crore ($13.5 billion) in FY 18, aftermarket rose by 9.8% to Rs. 61,601 crore ($9.2 billion) – up from Rs 56,096 crore ($8.4 billion) in the previous fiscal.
Source- Economic Times.