NEW DELHI: Automakers in India faced tough time in 2017 with passenger vehicle exports stagnating due to complexities in GST, policy uncertainties and rapid changes in car-making technology. According to the latest data released by Siam, export of passenger vehicles from India stood at 7,38,894 units in 2017 against 7,38,137 units in 2016.
“We need more clarity in the taxation structure and policies before we make fresh investment in the country,” a senior official of an OEM told Express. According to him, a fall in exports combined with low domestic sales puts pressure on manufacturers.
“The system of GST refund is having an impact on the export of PVs. As per our information, carmakers are waiting for a pending refund amount of `2,000 crore,” Siam deputy director general Sugato Sen said, adding that one particular company had around `800 crore of pending GST refunds.
Siam data highlight how exports have fallen from the month of July when GST came into effect. In the first two quarters of the 2017 (calendar year), exports grew 12.56 per cent and 13.79 per cent, respectively, while exports declined 12.87 per cent and 7.04 per cent in the next two quarters.
Puneet Gupta, associate director of consultancy firm IHS Markit, said, “Companies will hold on their investment till 2020 when policies are expected to become clear. Foreign OEMs might prefer making cars in the local market or exporting it from a nearby country rather than shipping it from India.”
Gupta added rapid shift towards electric vehicle technology might further change priorities for companies as they are more focused on research and development work rather than launching new models or finding new markets.
According to reports, Nissan will not make new Micra for European market from India. Volkswagen is also expected to lower the export of its Vento model to its biggest market Mexico.
The senior official cited above added that with three companies controlling 75 per cent of the domestic market, catering to foreign markets became a priority for many companies.
Exports of PV saw a steep rise in FY12 when it grew 14.5 per cent and registered healthy growth until CY17. “India became a manufacturing base for many companies but with a fall in exports for made-in-India cars, it is slowly losing its image of a manufacturing base,” the official said, adding that market leaders have increased their focus on the domestic market and the same norm is likely to be followed by others.