Auto component makers seek higher rebate on R&D spend

Girja Shankar Kaura

Tribune News Service

New Delhi, January 24

The Automotive Component Manufacturers Association (ACMA) has stressed the need to increase the rate of weighted deduction on research and development (R&D) spend as also to keep auto components at 18% rate in the Goods and Services Tax.

Commenting on the Auto Component Sector’s expectations of the forthcoming Budget, Rattan Kapur, president, ACMA, said, “We anticipate the forthcoming Union Budget to uplift the market sentiments which will allow for growth and development of the domestic auto components sector. Achieving a world-class quality and new product development will only be possible in the auto component industry by enhancing spend on R&D and creating relevant infrastructure for innovation”.

“With significant changes in emission and safety regulations, it is imperative for the component industry to enhance their R&D expenditure. It is, therefore, critical that earlier weighted deduction of 200% on R&D expenditure be immediately restored. That apart, while we are eagerly awaiting the announcement of GST implementation, it is critical that the GST rate on auto components is low and a reasonable transition period is extended to the industry to effectively adapt to the changes in the taxation environment”.

Other expectations include a lower GST rate as a higher GST rate could adversely impact the auto component industry especially the aftermarket that continues to suffer due to issues of counterfeiting/ non-genuine/substandard /imported parts. The auto components should, therefore, be kept at the lower rate of 18% rather than the 28% higher rate.

The ACMA is also of the view that there should be adequate transition time for MSMEs to adopt GST and customs duty on alloy steel and secondary aluminium alloy should either be eliminated or reduced.