WOWs and WOEs for the automobile sector

Jul 12 2014, 13:05 IST
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New finance minister Arun Jaitley had already extended these excise duty concessions till December 2014. New finance minister Arun Jaitley had already extended these excise duty concessions till December 2014.
SummaryNew finance minister Arun Jaitley had already extended these excise duty concessions till December 2014.

to meet credit and remittance needs of small businesses, unorganised sector, low income households, farmers and migrant workforce. The improvement in availability of finance is a major driver for increasing penetration of automobiles in the country.

Capability development measures

The increase in the FDI cap in the defence sector from 26% to 49% will help improving the overall capability and skill-sets of the manufacturing sector as the defence sector utilises complex and hi-tech processes for component manufacturing. Some auto component firms will also consider this as an opportunity to diversify into the defence sector. With the proposed launch of the national multi-skill programme “Skill India”, five new IITs and five new IIMs there will be a greater focus on developing technical and managerial skills for the entire manufacturing sector.

But there are some unmet demands…

The auto industry had many more demands that have not been met in Budget 2014, such as equal rate of excise duty for all passenger cars, increased rate of depreciation to compensate for shorter ownership cycles, accelerated depreciation for commercial vehicles and vehicle life terminal policy. It remains to be seen how these will be looked at in the years going forward.

Rajeev Singh

(Nikhil Pingle, associate director, KPMG in India, also contributed to this article)

Rajeev Singh is partner, KPMG in India. Views are personal

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