The automotive industry wishes for fewer GST slabs for vehicles and streamlining of compliance processes. Automotive component GST rates may be standardised to 18%.
Key developments
- In spite of a volatile regulatory environment, FY2018 has been a healthy growth year for India’s automotive industry
- Industry volumes grew by about 11.3% in April-Dec on a year-on-year basis
- Passenger vehicles segment rose around 8.1%, CV by around 15.2%.
- Total two-wheeler market grew 11.8%, while exports grew at a healthy rate of 13%.
- The automotive component industry continued to thrive due to a sharp growth in OEM demand and attractive exports growth.
- Technology change and its importance have become apparent to the industry.
- Safety and fuel efficiency came to the centre stage with expected regulation changes — to BSVI by 2020 being the steepest challenge
R&D and tech acquisition: Facing an uphill challenge with the rapid technology shifts, the industry needs to invest heavily in R&D. An increase in weighted deduction of R&D investments will provide additional resources to the industry. The government might also consider further investments in automotive testing, validation and safety.
GST rates and compliance: The automotive industry wishes for fewer GST slabs for vehicles and streamlining of compliance processes. Automotive component GST rates may be standardised to 18%.
Push for e-mobility: The government’s commitment to promote e-mobility may be supported through the Budget by lowering the GST rate on Battery Electric vehicles (BEV) to 5%. GST rates and import duty for BEV components can also be reduced to encourage domestic manufacturing and localisation of this segment.
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