Saturday, February 28, 2015

Budget 2015-16: Top 5 Hits and Misses for Auto Sector


Union Budget 2015-16

Union Finance Minister Arun Jaitley presented the Union Budget. With no major announcements for the auto sector, the industry has had a mixed reaction. But the announcement for implemenation of GST from April 2016 will be welcomed by the industry.


Here's a look at the top 5 hits and misses for the auto sector in the Union Budget.


Hits


1. The definite date for GST implementation by April 1, 2016 is expected to be a major boost for the automotive industry. Moving to GST is expected to attract good investment in the sector and also create demand.


2. Custom duty on import of completely built unit of commercial vehicles increased to 40% from 10%. This will help the local manufacturers by stemming imports. SIAM had also demanded a hike in the custom duty.


3. Corporate Taxation cut to start from next year. Corporate tax trimmed to 25% from 30% for next year. It is good news as the companies will have more money to invest. However, only worry is that it is still not clear as what would the quantum of cut as a five year time line has not been given.


4. Rs 79,000 crore investment in infrastructure including construction of one lakh kilometres of new road will give boost.


5. Investments and reform in agriculture will help farmers make more money thus boosting demand for automobile products in the rural market Specially this will help the two-wheeler industry.


Misses




1. Only Rs 75 crore allocated for electric vehicle manufacturing that is seen as a disappointment as the industry was expecting much more in this direction.


2. There was no announcement for the automotive sector in specific. No revision announced in the Excise Duty slabs.


3. Nothing was offered to give boost to Randamp; D in the automotive sector.


4. Increase in service tax cess on the petroleum products will also hurt the industry.


5. No announcement to correct the inverted tax structure. Some of the raw material attract more duty than the finished goods such as rubber, ally etc. This puts Indian manufacturer in a disadvantageous situation.






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