ACMA welcomes Budget’s focus on manufacturing sector but flays excise hike on cars

The Automotive Component Manufacturers Association of India (ACMA ) has welcomed the thrust in the Union Budget towards the manufacturing sector, especially MSMEs. The industry body also expressed satisfaction for the thrust given to infrastructure development, upliftment of the rural economy and significant outlay for promotion of the social sector, including education, skill development and healthcare.

Congratulating the Union Finance Minister, Vinnie Mehta, executive director, ACMA, said: “We are glad that he has outlined concrete steps towards implementation of Direct Tax Code (DTC) and the GST. We do hope that these critical reforms are undertaken and implemented at the earliest.”

“ACMA also welcomes the focus on manufacturing especially the Micro, Small and Medium enterprises (MSMEs). MSMEs constitute over 70 percent of ACMA’s membership and access to capital has been one of the major constraints for the sector. We hope that setting up of the Rs. 5,000 crore ‘India Opportunity Venture Fund’ will enable the sector access the much-needed capital. We are also glad that the weighted deduction of 200 percent on expenditure on R&D has been extended for another five years, which will motivate the industry to focus on innovations and new product development. Further, shortage of skilled manpower has been an issue of significant concern to the industry; the introduction of weighted deduction of 150 percent on expenditure on skill development of employees will help in mitigating the concern”, added Mehta.

However, ACMA says the increase of excise duty on vehicles would result in a price hike and in turn affect sales adversely. This is likely to have a ripple effect on the auto component sector as it grows in tandem with the vehicle industry. Furthermore, increase in customs duty on flat-rolled steel from 5 percent to 7.5 percent could unfavourably impact the component sector as this is one of the key input materials for the industry.