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Home arrow Automotive arrow Union Budget 2011-12: Sops given to the heavy industry sector
Union Budget 2011-12: Sops given to the heavy industry sector Print E-mail
Written by Ganesh   
Tuesday, 01 March 2011
New Delhi:  Minister for Heavy Industries & Public Enterprises, Praful Patel welcomed the sops given to the heavy industry sector in the Union Budget 2011-12.

In the heavy electrical equipment manufacturing sector, he excise Duty exemption has been provided for domestic equipment manufacturers of capital goods for expansion of existing mega power projects and Ultra mega power projects by delinking it from customs duty.

The reduction of the current surcharge of 7.5% income tax applicable on domestic companies, to 5% will also greatly benefit the domestic heavy electrical equipment manufacturing sector.

The setting up of the National Mission for Electric/Hybrid Vehicles will allow synergies, concerted, prioritized, collaborative and continued support by the Government for greater adoption of electric/hybrid vehicles and their manufacturing in the country, which will not only lessen the impact of transportation on the environment but also lessen the dependence on fossil fuel.

Fiscal concessions for electric/hybrid vehicles:
- Excise duty on parts of EVs reduced to 5%.
- Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteries imported by manufacturers of EVs.
- Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.
- Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehicles.
- Reduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles.

The other announcements in the Budget with regard to the auto sector are:
- The current excise and customs duty for the industry has been retained. The continuation of lower existing excise duty will help the sector to expand further.
- Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced to 200 per cent. This will help spur R&D investments in the sector.
- Outright concession to factory-built ambulances in place of the existing refund-based concession from excise duty has been approved. In addition, refund-based concession that is available to taxis having a seating capacity not exceeding 7 persons including the driver has been extended to vehicles up to a seating capacity not exceeding 13 persons including the driver, thereby removing the existing anomalies.

Steel sector:
Higher export duty on iron ore has been a long pending demand of the steel industry and the Budget has taken care of the issue by increasing the export duty to 20%. This should ensure higher availability of iron ore for the Indian steel industry. Withdrawal of export duty on pellets should encourage installation of pellet plants by mining companies. More pellet plants in the country will also benefit the steel industry.

Defence:

The Budget has allocated Rs 164,415 crores towards defence, which is 1.96 percent of the GDP.

The Capital Expenditure in Defence has gone up from Rs. 60000 crores in 2010-11 to Rs 69199 crores in 2011-12, a growth of over 15 percent. The share of capital expenditure in the defence budget now stands at 42.08 percent.

Manufacturing Policy:
The draft national manufacturing policy will soon be placed before the Cabinet. This is expected to bring down the compliance burden on the industry through self-regulation and help make Indian industry globally competitive.

Finance Minister, Shri Pranab Mukherjee, informed that the share of manufacturing in GDP is expected to rise from about 16% to 25% over a period of ten years.

 
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