BUDGET WISHLIST: Automobiles

CEOSPEAK: Sanjay Labroo, Asahi India Glass

"We want consistency in the government's policy for the automobile sector. Abrupt policy changes hamper companies' growth plans".

Chamber Speak

CII
CII has asked for a reduction in excise duty from 24 per cent to 16 per cent on all passenger vehicles, including multi-utility vehicles and petrol driven vehicles for transport of goods. CII has also urged the government to reduce excise duty to 8 per cent on 2-wheelers and its components.

Ficci
Reduction in tariff results in higher revenue as noticed recently in the case of motor cars, where the industry has registered growth rate of 22 per cent till September 2006.

Therefore, excise duty rates on all passenger vehicles should be brought under 16 per cent core excise rate.

EXPERTSPEAK: Ramesh Rajan

Go for uniform excise structure

The Automotive Components Manufacturers Association, in its pre-Budget memorandum, has requested the government to bring the auto-component sector within the purview of an incentive structure prevalent in some competing countries. The association has also requested the government to benchmark its policies against that of competing countries like Thailand and China.

The Society of Indian Automotive Manufacturers has recommended, in its pre-Budget memorandum, the implementation of a uniform excise duty structure, R&D incentives and incentives for fleet modernisation.

Against this backdrop, the expectations of the automotive industry from the upcoming Budget would be: reduction of excise duty on all cars from 24 per cent to 16 per cent; reduction of excise duty on two and three-wheelers and auto components from 16 per cent to 8 per cent; merging of multi-taxes and duty structure such as basic excise duty, automobile cess and abolishing the national calamity contingent duty; reduction in Customs duty from the current level of 12.5 per cent to the rates prevailing in Asean countries (in the range of 7-8 per cent.); direct tax breaks such as tax holiday for the auto-component industry for investment exceeding the set threshold as well as exemption for exports; extension of weighted tax reduction at 150 per cent on R&D.

On the negative side, it is probable that the service tax may be raised to 14-15 per cent from the current 12 per cent. Further, the reduction in Customs duty may boost imports, which may impact the domestic auto-component industry.

The author is leader, automotive practice, PricewaterhouseCoopers