The much awaited Union Budget of the newly-elected government was tabled in the Parliament this morning. Though there was big bang announcement the Budget has attempted to address several issues including some raised by the auto industry. The major announcement is the increasing the FDI limit in insurance and defence from 26% to 49%.
As the government has already announced the extension of the Excise duty cut benefits for the auto industry, till December this year, the Finance Minister only indicated that a solution to the problems relating to the indirect tax regime may be finalised in the current year itself. The Minister indicated the government’s intent in the implementation of the Goods and Service Tax (GST) that the auto industry had been demanding for quite some time.
Automotive Components Manufacturers’ Association (ACMA) of India, welcomed the Budget as it was pragmatic with adequate focus on development of social sector, the industry and infrastructure. The President of the apex body of the component manufacturers, Harish Lakshman said, ACMA welcomes the announcement of the intent for implementation of GST and DTC at an earliest, as well as measures to encourage the Micro, Small and Medium sector (MSMEs) including revision of its definition.
“MSMEs constitute over 70 percent of ACMA’s membership and scaling-up has been a challenge for the sector,” Lakshman said. ACMA also welcomed the extension of 15% allowance to companies investing more than Rs 25 crore in new plant and machinery will help attract investments in manufacturing sector including automotive. The amendment announced in the Central Excise Law to overcome the impact of the Supreme Court’s Fiat judgment is a significant move as it has been a longstanding demand of the manufacturing industry, especially the auto industry.
Vikram Kirloskar, President, SIAM welcomed the focused approach on infrastructure development and on simplified taxation in the Union Budget. “Under the current tight fiscal situation, the Finance Minister has tried to balance and manage the expectations from different quarters with a need for growth and fiscal prudence. The budget has rightly given a positive direction on issues like implementation of GST, retrospective taxation as well as simplification of the tax regime. This will revive investor sentiment and kick start growth and development in the medium to long term,” he added.
Mohan Himatsingka, President, Federation of Automobile Dealers Associations (FADA) said, given the little leeway available to him and tight-roping walk he had to do, the Finance Minister has presented a balanced Union Budget 2014-15. FADA was expecting higher rates of depreciation especially in the case of commercial vehicles that have been reeling under acute slowdown for about 3 years now. Likewise, FADA was also expecting raise in the depreciation rates in the case of passenger vehicles in tune with the market reality and to spur demand. “We, in FADA, hope that these suggestions would be incorporated before the Union Budget 2014 is finally passed,” he said.
However, in view of the precarious state of the Government’s finances and the needs of balancing fiscal deficit and reviving the growth & investment climate, the Finance Minister could not have done better.
