With the Union Budget approaching, the Indian automobile industry, which is going through one of the toughest times in history, is hoping for a waiver from the government. After a stellar run in FY18-19, the sector has suffered a lot due to several constraints including BS-VI norms, covid restrictions and chip shortage in successive years.
The industry is expecting some certainty in tax and regulatory policies. The sector has demanded a uniform Goods and Services Tax (GST) rate of 18 percent on all auto parts in the upcoming budget. Explain that the current rate of GST on some auto components is 28 percent.
The Automotive Component Manufacturers Association (ACMA), in its recommendations to top automakers, has asked the Center to consider increasing the exemption of duties and taxes on Export of Products (RoDTEP) rates. The RoDTEP is a major export promotion scheme that was introduced in January 2021 as a replacement for the Merchandise Exports Scheme from India, when the WTO ruled against the export subsidy programme.
According to ACMA, RoDTEP rates of 1 per cent or less for the auto component sector are insufficient to cover the case of non-refundable taxes and duties on export products. The industry body said that this is proving to be detrimental to the competitiveness of the auto component industry.
The automobile industry in India (including component manufacturing) is expected to reach Rs 18 trillion by 2026. Experts believe that the industry can make strong growth in 2021-22 after recovering from the pandemic.
first published:Jan. 21, 2022, 3:24 p.m.
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