Budget 2014-15 corrects dogmas plaguing Indian auto industry
Announcements took into its aegis implementation of GST, retrospective taxation and simplifying taxes to fuel positivity in investment to foster medium to long term growth and development.
Increase in FDI in defence and insurance to 49% fuels competitiveness. Infrastructure development through allocation of Rs. 14,389 crores for rural roads and Rs. 37,880 crores for National and State Highway, alongwith 16 new ports projects boost automotive industry growth in the long run. Initial funding of Rs. 24 crore for National Electric Mobility Mission plan through the Ministry of Heavy Industries fuels electric and hybrid vehicle manufacturing here.
Last year, Indian auto industry last year dealt with dogmas of valuation of goods under Central Excise Act. SIAM requested an amendment and budget now has a notification for amending excise valuation definition which sets the wheels in motion to do away with major litigation and disruption in business practices.
Indian automobile industry is highly globalised and transfer pricing regulations result in litigation. SIAM suggested using multiple year data for comparison and analysis instead of a single year data. This inclusion is a positive development.
Finance Minister spoke about setting up an Export Promotion Mission, which will begin the process of addressing issues of embedded tax in price of export products that hurt exports. No remission is available for state level duties and taxes at present, but now state duty issues can be addressed.
As retrospective tax amendments would not be resorted to, foreign investors will have more clarity in regards to investing in India on the bcak of positive sentiment. SIAM had requested a GST implementation roadmap, and is now happy that this is a priority for the FM and legislative schemes will be introduced in 2014.
Mr. Kirloskar also thanked the Finance Minister for extension of reduced Excise Duty announced last month. Indian auto industry hopes to see the concession extended beyond 31st December 2014. Demand stimulation measures for Commercial Vehicle sector is missing as the industry continues to endure negative results for over 27 months. Resolving the current mining sector deadlock would fuel commercial vehicle segment revival to some degree. SIAM’s head says the budget should be dissected from a medium and long term perspective, a anew Central government is expected to make bold changes.