Union Budget - Indirect impact on auto component industry
Tuesday, 07 July 2009
New Delhi: The Union Budget announced by the Finance Minister today would not have any direct impact on the auto-component industry, said Mr. J.S. Chopra, President, Automotive Component Manufacturers Association of India (ACMA)

Welcoming the thrust on infrastructure development in the Budget, Mr. Chopra said that the increase in the outlays for NHAI and JNNURM would fuel growth in the automotive industry in the medium to long term. The auto-component industry would be an indirect beneficiary of this growth.

The focus on infrastructure, through the various schemes, will have a positive impact on economy. Increased infrastructure spending will have a direct and positive impact on the automotive industry. The removal of FBT is also a welcome step, said Mr. Chopra.

Mr. Chopra also expressed satisfaction that the Finance Minister recognised the challenging times being faced by the domestic industry during this time of recession and did not further bring down the rates of Customs Duty this year, which was one of the demands of ACMA.

Furthermore, by retaining the Excise Duty at 8%, the Finance Minister has ensured that the stimulus provided to the industry earlier in the year would be continued till the industry fully recovers from the current recession.

Mr. Chopra also welcomed the Finance Minister’s announcement that full GST would be implemented in 2010. However, there was no announcement in regard to further reduction in the CST rate this year, he added.

ACMA has also welcomed the Finance Minister’s decision to to promote skill development in the industry by increasing allocation and promoting the setting up of new IITs and NITs.

Mr. Chopra said that overall the budget was neutral for the auto-component industry as it did not contain anything new for the industry. The small reduction in the Excise Duty on large cars and petrol driven trucks would have a very marginal positive impact on vehicle sales.

Mr. Jayant Davar, Vice President,, ACMA added that the auto-component industry is a sunrise sector counting on extensive exports to take advantage of our low cost country (LCC) status.  We want the government to give some kind of kick start to our exports to make them more attractive to make them international.  Nothing happened there, added Mr. Jayant Davar, Vice President, ACMA.

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