Mr. Vikram Kirloskar, President, SIAM (Society of Indian Automobile Manufacturers) welcomed the focused approach on infrastructure development and on simplified taxation in the General Budget 2014-15 presented by Shri Arun Jaitley, Hon’ble Finance Minister. Mr. Kirloskar said that 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.
The announcements of increase in FDI in defence and insurance to 49% are also positive moves to make these sectors competitive. Focus on infrastructure development through allocation of Rs.14,389 crores for rural roads and Rs. 37,880 crores for National and State Highway,development of 16 new ports projects is also a welcome move which will boost growth of the automotive industry in the long run. Initial funding of Rs. 24 crore for National Electric Mobility Mission plan through the Ministry of Heavy Industries will kick start the electric and hybrid vehicle manufacturing in India.
One of the major issues confronted by the auto industry last year was the dispute with respect to valuation of goods under Central Excise Act. SIAM requested that this be addressed in the parliament and the budget has now come out with a notification for amending the definition for excise valuation. This will help the industry avoid a lot of litigation and disruption in business practices.
The automobile industry is highly globalised and transfer pricing regulations create a lot of litigation in this industry. One of the submissions of SIAM was to use multiple year data for comparison and analysis instead of a single year data which has now been allowed and is a positive development.
Finance Minister mentioned setting up of an Export Promotion Mission having all stakeholders including the states. This will start the process of addressing issues of embedded tax in the price of export products which hurt our exports. The main problem is the state level duties and taxes for which no remission is available today and it is expected that this initiative will be able to address the state duty issues.
Finance Minister’s assurance that retrospective tax amendments would not be resorted to would pass the right message to foreign investors to invest in the country. SIAM had requested for a roadmap for implementation of GST and we are happy to hear that this is a priority for the FM and that legislative schemes will be brought in this year.
Mr. Kirloskar once again thanked the Finance Minister for the extension of the reduced Excise Duty till December 2014 and said that industry was hoping to see this being extended beyond 31st December 2014 also. The industry was hoping to see some demand stimulation measures for the Commercial Vehicle sector which has been in negative territory for over 27 months and is disappointed that it has not happened in the Budget. However, the announcement on resolving the current impasse in the mining sector expeditiously would be helpful in reviving the commercial vehicle segment to some extent.
Mr. Kirloskar reiterated that we should look at this budget from a medium and long term perspective and with a strong government at the centre, we expect more bold interventions in coming days