With an aspiration to cross the USD 100 billion mark and to
have at least five Indian suppliers amongst top-global-hundred by 2020, the
Automotive Component Manufacturers Association (ACMA), the apex body for the
Indian auto component industry has submitted its recommendations to the
Government for the forthcoming Union Budget for the year 2015-16.
ACMA is looking forward for support from the government to
revive the auto components industry and to realise their ambition of growing
exports to USD 35 - 40 billion and build overseas revenues of USD 20-22 billion
over the next five years. The industry clocked a turnover of USD 35 billion in
2013-14 with exports of over USD 10.2 billion.
Ramesh Suri, President, ACMA, said the ‘Make in India’ call
by Prime Minister Modi which is designed to facilitate investments, foster
innovation, enhance skill development, protect intellectual property and build
best in class manufacturing infrastructure in the country could not be more
“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 Suri.
In the last fiscal, the auto sector faced one of the most
trying times with 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
In a press release issued by ACMA it said some of the salient
recommendations by the body to the Government are:
· Continuation of 10
pc excise duty on auto components
· Early implementation of GST / Phasing out CST. It said
that till such time the GST is implemented, CST should be reduced to 1pc from
existing 2 pc.
· Elimination of customs duty on alloy steel, mild steel,
aluminium alloy and secondary aluminium alloy
· Allowing input credit on diesel. ACMA noted that due to
power shortage manufacturers have to resort to generating their own power
though gen-sets thus increasing the cost of production. ACMA has recommended
that such manufacturers be allowed to avail input credit on diesel procured for
internal power generation.
· Service Tax -
Credit on various Services should be provided. Services like canteen,
transportation of employees, repair and maintenance of commercial vehicles etc.
are directly related to manufacturing, therefore manufacturing units should be
allowed to avail Cenvat credit on such services.
· Encouraging Research & Development. At present, ACMA noted
that 200 pc weighted deduction under section 35(2AB) of the Act is available
for in-House R&D facility and 175 pc weighted deduction on outsourced
R&D from approved Institutions i.e National Laboratories, Universities,
Scientific Research Institutes and IITs.
The 200 pc weighted deduction should be extended to R&D
facilities, which are outsourced to Third-Party service providers or other
institutions. Furthermore, the amount of weighted deduction under Section
35(2AB) maybe allowed when computing tax under 115JB. This will alleviate
accumulation of MAT credit.
· Enhancing Depreciation Rate on Capital Goods. The current
depreciation rate on Capital Goods should be enhanced to 25 pc from 15 pc.
Further, domestically manufactured capital goods be allowed 40 pc depreciation.
This will encourage Capital investment in the industry
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