ACMA's recommendations to the government include incentivising capital expenditure, revising depreciation rates on plant and machinery in the auto component industry from 15% to 25%, and rationalising GST rates on EVs and components.
12 Jul 2024 | 4142 Views | By Prerna Lidhoo
As India gears up for Union Budget 2024-25, the auto components industry awaits measures that could shape its future, focusing on sustainability, innovation, and growth as key priorities.
The Auto Component Manufacturers Association’s (ACMA) recommendations to the government include incentivising capital expenditure, revising depreciation rates on plant and machinery ...
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As India gears up for Union Budget 2024-25, the auto components industry awaits measures that could shape its future, focusing on sustainability, innovation, and growth as key priorities.
The Auto Component Manufacturers Association’s (ACMA) recommendations to the government include incentivising capital expenditure, revising depreciation rates on plant and machinery in the auto component industry from 15% to 25%, and rationalising GST rates on EVs and components.
“ACMA is looking forward to a growth-oriented budget with a continued thrust on reforms and infrastructure development. Schemes such as the PLI have been of great support to the automotive industry, and we are hopeful that such measures will be continued,” Shradha Suri Marwah, President ACMA and CMD Subros Ltd, said.
ACMA has also requested the Government for clarification of tax deductions on business benefits and perquisites under Section 194R and has also suggests an amnesty scheme for resolving legacy disputes under Customs laws.
Sunjay J Kapur, Chairman of Sona Comstar and CII Northern Region, too, expects the Union Budget 2024 to accelerate India's sustainable growth, particularly in the manufacturing and technology space. “By prioritising R&D and cross-sectoral collaboration in clean tech and mobility, the budget should aim to drive both innovation and economic growth. We anticipate robust support for electric mobility with a focus on building charging infrastructure, that will help instill confidence in consumers to embrace electric vehicles,” he said.
He adds that the new EV policy has already solidified India's position as a key EV manufacturing hub. “However, rationalising GST rates on components has been a big ask and the industry expects some development in that direction. With the PLI schemes and the expected FAME-III, India is set to further enhance its domestic manufacturing capabilities significantly. I believe the upcoming budget will be a crucial enabler in achieving this vision,” he says.
R&D incentives are another area where the industry players see a potential to catalyse future growth. “We advocate for the re-introduction of R&D incentives in the form of tax benefits to foster innovation and reduce import dependency. Rationalising GST on components and electric vehicles will bolster domestic manufacturing and job creation. Additionally, allowing CSR expenditure as business expenditure for tax will encourage industry contributions to society,” Nirmal K Minda, Chairman and Managing Director, Uno Minda said.
He said that continued support for EV adoption through schemes like FAME and EMPS, coupled with robust charging infrastructure, is essential as well. “We are confident that a holistic approach encompassing these measures will position India as a global automotive powerhouse and contribute significantly to the nation’s economic prosperity,” he said.
EV players say that facilitation of battery cell manufacturing and large-scale battery operations is crucial for bolstering EV infrastructure and inspiring greater confidence in EV adoption. “Accelerating the transition to EVs is imperative for India to achieve its net-zero targets, underscoring the need for rapid enhancement and development of EV infrastructure. The forthcoming budget must prioritise furthering this infrastructure to ensure swifter EV adoption across the nation. We anticipate the government to introduce compelling schemes that enhance the competitiveness of electric vehicles,” Atul Aggarwal, Managing Director, Sterling Tools Limited said.
As user demand grows, he adds, it will drive up volumes in the electrical industry, fostering cost efficiencies and rendering subsidies unnecessary over time. “This approach promises to build a self-sustaining EV ecosystem, pivotal for the future of manufacturing in India. Our policies and budget implementation need to be focussed with the mission of making our country as a global hub for EV component manufacturing,” he said.