Mr Ravi Kant, President, SIAM cited several positive proposals in the Union Budget 2009-10 presented by the Hon’ble Finance Minister of India. These included increased expenditure by National Highway Authority of India (NHAI), enhancement of outlay of Prime Minister’s Gram Sadak Yojana by 59% and further expansion of allocation to JNNURM. These would have significant positive impact on the automobile industry, in the medium to long term.

Mr Ravi Kant said that in recent times, rural market has been playing an important role for the automotive sector and measures aimed at enhancing the income levels in rural areas including increase in allocation to NREGA will have positive impact on automobile industry.

He welcomed the Finance Minister’s announcement stating that Goods & Services Tax (GST) would be in place from 1^st April 2010. This is an important announcement for stability and predictability in the taxation structure. However, absence of any mention about reduction of Central Sales Tax (CST) from 2% to 1% as per the roadmap, was a cause of concern. The increased government borrowings may lead to liquidity issues and rise in interest rates. These would need to be addressed through monetary policy.

The announcement of formation of a Committee to review petrol and diesel pricing is a positive move.

On indirect tax front, SIAM welcomed retaining of the rates of excise, customs and service tax. The reduction of the additional levy of Rs 20,000/- to Rs 15,000/- is an important first step and the industry hoped that further tax rate rationalization would take place and the excise duty on Utility Vehicles and Cars other than Small Cars would go down.

On direct tax front, abolition of Fringe Benefit Tax (FBT), Commodity Transaction Tax (CTT) and removal of surcharge of 10% on personal income tax will also have positive impact.

However, Mr Ravi Kant added that while these proposals will have a positive impact on the automobile industry, these will be visible in the medium term and long term rather than having any immediate impact, more so for the commercial vehicle segment, which is going through severe downturn. A specific package for this segment is required.

Courtesy: Society of Indian Automobile Manufacturers

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Posted by Naresh Koshti on 8 July, 2009 3:57:17 PM IST #