Automotive component makers body ACMA today asked the Central government to abolish custom duty on alloy and mild steel, aluminium and secondary aluminium alloy and to continue with the 10 per cent duty on components to revive the industry.
"It is recommend to continue with the existing rate of 10 per cent on chapter 84 and 85 items, which is currently valid only till June 30. Also, the domestic steel/aluminium alloy suppliers benchmark their prices based on the landed prices.
"This makes the inputs expensive for the domestic component manufacturers. Elimination of customs duty on the raw material will therefore set right the equation," Automotive Component Manufacturers Association (ACMA) said in its budget suggestions to the Union Finance Ministry today.
Expressing the hope that the Narendra Modi-led government will adopt necessary measures to revive the domestic automotive industry, ACMA said the auto industry has been facing one of the most challenging times ever.
"Issues such as fluctuations in the currency, high inflation and increasing interest rates have significantly dented the vehicle sales in the last one year," it said.
It also demanded that manufacturers be allowed to avail input credit on diesel procured for internal power generation and government should allow 100 per cent Cenvat credit on capital goods in year of purchase to encourage investments.
Currently, 50 per cent Cenvat credit is allowed on capital goods during the year of purchase, while the remaining is allowed to be availed in subsequent years, the Association said.
Encouraging research and development, hiking of depreciation rate on capital goods to 25 per cent from 15 per cent at present and an early roll out of the Goods and Services Tax are the other demands sought to be incorporate in the Union Budget, which is to be presented early next month.
"The automotive industry is one of the key drivers of the Indian economy, which is currently undergoing unprecedented downturn. We are hopeful for a favourable outcome from the forthcoming budget," ACMA president Harish Lakshman said.
