NEW DELHI: In the wake of a severe slowdown in the auto sector, auto components industry on Friday demanded a uniform 18 per cent GST to help companies with their working capital borrowings, which could be used to invest in long-term assets. Currently, about 60 per cent of components are taxed at 18 per cent, while the remaining high-value parts attract a duty of 28 per cent.
“Since we are largely a B2B business, uniform 18 per cent GST would not have an impact on the government exchequer, but would help our membership in managing their working capital borrowings, which could be better used to invest in long-term assets,” said Ram Venkataramani, Automotive Component Manufacturers Association of India (ACMA) president, at the association’s annual summit.
The decline in auto sales coupled with higher Goods and Services Tax (GST) rates and increase in import of auto components from Asian nations has impacted country’s component industry which employs 50 lakh people and contributes 2.3 per cent to India’s gross domestic product (GDP).
After clocking 15 per cent growth last fiscal, the demand has been a challenge for the sector since September 2018 and this would result in subdued results for FY20 in line with the market sentiments, Venkataramani added. Moreover, meeting newer emission and safety norms, and gradually shifting towards electric mobility has added pressure to the component industry.
Attending the event, Maruti Suzuki India MD and CEO Kenichi Ayukawa asked the components makers to start manufacturing electronic vehicles and certain key parts in the country to cut imports of such items.
Ayukawa further said, “Knowing the government policy in advance is not easy. If the government sets targets on the end-goals and allows freedom to the industry players to choose the technology that would be best suited to achieve the end-goals.”