The head of German Tier-1 major Continental in India expects the government to lower taxation on Li-ion batteries and other EV components.
For Continental India, the domestic arm of German Tier-1 major, the upcoming Union Budget 2023-24, holds a lot of potential to spur growth in India's evolving electric mobility segment. The company also expects the government to give policy thrust for India to become an engineering-research and development (ER&D) hub of the world.
According to Prashanth Doreswamy, president and CEO, Continental India, "Many automotive suppliers will be keenly following the Union Budget in a hope that the government introduces the right initiatives to incentivise efforts being made and accelerate the industry’s growth. "
"Considering the fact that the auto industry contributes about a sizeable six percent to India’s GDP. A reprieve on Goods and Service Tax (GST) will come as a welcome move. The focus over the last year has been on efficiently implementing clean and green mobility, and I hope there to be a relief on the GST levied on EV parts like lithium-ion batteries and ancillaries. There was widescale anticipation during the last budget that GST for the aforementioned would be slashed but it continued to remain at 18-28 percent. This is something that in my opinion will be reviewed and implemented in 2023."
Rationalisation of GST on vehicles
Doreswamy further mentioned that high GST rates are making vehicles - both cars and two-wheelers - unaffordable for buyers especially with increased prices of raw materials, fuel prices, and tougher regulations having already burdened the cost.
"The government should look at long-standing demand of automotive industry for lowering GST rates, which are currently taxed at 28 percent with a cess levied depending on body and engine size. Therefore, I earnestly hope there is a reduction of GST on car safety devices and features to make them a lot more affordable and accessible.
"There is a very strong need to extend/continue granting fiscal incentives towards export of ER&D services undertaken in core sectors like automotive. In India, including research and experimental development in natural and inter-disciplinary fields like engineering and science, which aims towards developing innovative digital products and solutions. These incentives could be provided through continuation of SEIS.
"We understand there are suggestions to have an upper cap to claim incentives to enhance participation especially from MSME sector. While, this is very much appreciated, however, given potential of ER&D in core sectors like automotive, both in terms of export potential and employment generation, services like ER&D could be excluded from such capping."
"Service units set-up in SEZs/EOUs/STPIs should be allowed to avail benefit of these schemes," Doreswamy said.
"On a concluding note, I also look forward to the government extending the PLI or production linked incentive scheme for auto and auto component manufacturers, particularly for organisations focused on exports. In addition, there has been a zealous case made for FAME II to be extended beyond 2024, a decision, if made, will prove highly beneficial for the industry," Doreswamy signed off
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