Rajasthan eats into Punjab and Haryana’s business as it pays 8.5% lower value-added tax.
Over 100-odd bus body builders in Punjab and Haryana, the vast majority of them in the small and medium enterprise sector, are losing business to neighbouring Rajasthan due to tax anomalies. Punjab and Haryana charge 12.5 per cent as value-added tax (VAT) from bus body builders, while Rajasthan charges only 4 per cent. Consequently, the Punjab and Haryana units lose 15-20 per cent of their yearly business.
MS Grewal, vice-president, Lalru (Punjab)-based JCBL Ltd (one of the prominent bus body builders), said: “Punjab and Haryana are losing business to Rajasthan due to the tax difference. Rajasthan charges only 4 per cent as VAT from the bus body builders, while Punjab and Haryana charge 12.5 per cent.”
JCBL provides world-class mobility solutions in adherence to stringent quality standards like ISO 9001 & TS 16949 by TUV. Founded in 1989, JCBL is renowned for producing high-quality luxury bus, coach vehicles, mobile home, special application vehicles, school buses, and ambulances.
Commenting upon the demand, Grewal added, “Currently, the total demand for new buses in India is 65,000 per annum and is growing at 12-13 per cent. So, it is likely to touch 100,000 buses in 2-3 years.”
Echoing similar sentiments, Pardeep Mittal, managing director, Swami coaches & engineering Ltd, said, “ On an average, 10-15 per cent of the business is lost to Rajasthan annually because of the tax anomaly. We find it very difficult to compete with local players, especially when the government float their tenders for buses.”
Buta Singh, director, Hissar-based Navjeevan Motor Workshop, also agrees that tax anomalies are affecting the business in Punjab and Haryana.
Experts say the high tax structure coupled with high input costs in Punjab and Haryana except the National Caputal Region) is likely to put these units out of the business soon. In Punjab, there are 6-8 prominent and renowned bus body builders like Jalandhar-based Sutlej Motors Ltd (SML), JCBL, Amar Coaches, HMM Ltd etc. Apart from these, there are about 100 small time players, while the rest of them are from Haryana.
Jalandhar-based SML has signed an agreement with international bus manufacture Mercedes Benz for manufacturing bodies bus bodies for the Indian market and it also manufacture buses independently under a specific company Lexia Motors.
Experts also forecast the bus manufacturing industry might witness a total revamp in the years to come with the implementation of Automotive Industrial Standard (AIS) in the country. This will eliminate the small and unprofessional players who are least bothered about the quality.
Safety has been never given the importance it deserved, which led to the growth of lot of unorganised players for whom safety was not really the focus. But now priority was being accorded to safety.
The Automotive Industrial Standard, the code of practice for bus body designs and approval, will be enforced from April 1, 2009 and make it compulsory for body builders to adopt international safety norms, while manufacturing bodies bus bodies.
The code classifies buses like a city bus, intercity bus, school bus, long distance buses etc.
