Siam Indian Auto Industry
-
Upload
atul-bansal -
Category
Documents
-
view
228 -
download
0
Transcript of Siam Indian Auto Industry
-
8/2/2019 Siam Indian Auto Industry
1/40
Indian Automobile Industry SWOT Analysis
Strengths
Domestic Market is large
Government provides monetary assistance for manufacturing
units
Reduced Labor cost
Weaknesses
Infrastructural setbacks Low productivity
Too many taxes levied by government increase the cost of
production
Low investments in Research and Development
Opportunities
Reduction in Excise duty
Rural demand is rising Income level is at a constant increase
Threats
o Increasing rates of interest
o Too much competition
o Rising cost of raw materials
Automobile Production Trends (Numberof
Vehicles)Category 2004-
052005-
062006-07 2007-08 2008-09 2009-10 2010-11
Passenger Vehicles
1,209,876
1,309,300
1,545,223
1,777,583
1,838,593
2,357,411
2,987,296
CommercialVehicles
353,703
391,083
519,982 549,006 416,870 567,556 752,735
Three 374,44 434,42 556,126 500,660 497,020 619,194 799,553
-
8/2/2019 Siam Indian Auto Industry
2/40
Wheelers 5 3TwoWheelers
6,529,829
7,608,697
8,466,666
8,026,681
8,419,792
10,512,903
13,376,451
GrandTotal
8,467,853
9,743,503
11,087,997
10,853,930
11,172,275
14,057,064
17,916,035
GROSS TUNROVER OF THE AUTOMOBILEINDUSTRY IN INDIA
Year (IN USD MILLION)
2004-05 20,896
2005-06 27,011
2006-07 34,285
2007-08 36,612
2008-09 38,238
Conversion Rate Rs.40 = 1USD
-
8/2/2019 Siam Indian Auto Industry
3/40
Domestic Market Share for 2010-11
Passenger Vehicles 16.25Commercial Vehicles 4.36
Three Wheelers 3.39
Two Wheelers 76.00
-
8/2/2019 Siam Indian Auto Industry
4/40
SIAM EXIM Policy Suggestions
1. Credit of embedded tax
SIAM had got a study done through ICRA Advisory Services to
estimate the cascading impact of embedded tax in manufacturing
vehicles in India for which no set-off is available under any scheme.
ICRA looked at two states, Maharashtra and Tamil Nadu, which have
automotive hubs and had estimated in July 2003 that the quantum of
embedded tax amounts to around 12% of manufacturing cost.
Since this makes our vehicles less competitive by 12% in the
international markets, SIAM suggests that any export incentive
scheme offered to the exporters should factor this in the total value of
credit. This should be in addition to the Drawback/DEPB for actual
import duty suffered on raw material and component.
DEPB Scheme should be extended for at least two years till the
internal reforms are done.
2. Drawback for 2% education CESS should be admissible for claim
Presently the import duty structure is as under
a) Basic Custom Duty
-
8/2/2019 Siam Indian Auto Industry
5/40
b) CVD in lieu of Excise Duty + 2% CESS on CVD
c) 2% CESS on total Duty (a+b)
CVD and 2% CESS on all imported items are refunded as CENVAT
credit. When the imported input is used for export production, basic
duty is refunded as drawback. However, 2% CESS on total Duty
remains non-CENVATable / refundable.
Since all duties on inputs stage are neutralised by way of drawback
and or under licence route, the 2% CESS on total duty should also be
refunded as drawback.
3. Brand Rate Fixation
Effective from 1st April 2003 - the authority for fixation of drawback
delegated to jurisdictional central excise authorities. The central
excise authorities are raising several points while verifying the
data/fixing the brand rate.
Further all the rules concerning to fixation of brand rates are
formulated by the drawback department, Ministry of Finance. For any
clarification on these issues the central excise has to refer the matter
again to the Ministry. There are problems which the Exporters are
facing with the Central Excise Authorities - which is causing delay in
fixation of brand rate.
It is suggested that the choice should be given to the exporter to get
the brand rate settled from Ministry of Finance as was earlier done
under Simplified Drawback Scheme.
4. Export Obligations under EPCG Scheme
Past exports average performance without EPCG licence should not be
counted for imposing obligation on new EPCG licences.
5. Export under bond to Nepal & Bhutan
-
8/2/2019 Siam Indian Auto Industry
6/40
Currently the customs authorities do not entertain any refund of duty
on exported to Nepal and Bhutan if the payment is other than Letter
of Credit (L/C).
Payment terms such as TT / cheque, DD or Bank Guarantee may be
allowed as applicable for export to other countries.
6. Despatch of Documents to overseas parties
Currently despatch of documents to overseas parties is allowed only
through banks. This is a time consuming process and entail handling
charges.
Wherever the payment is coming in advance the exporter be allowed
to send documents directly to the party instead of routing through the
banks.
7. Rejected material sent back to shipper by importer of repute
Customs should not insist on physical verification of rejected material
sent back by importer of repute, under section 74 of Customs Act.
Customs may verify the export shipment with the incoming new
import shipment for ensuring that the part being sent back is identical
with the imported part. e.g. 100 pcs of Part A were imported by
importer of repute and cleared from the Customs. When parts were
examined at the factory it was found that 90 pcs of Part A are
acceptable and 10 pcs of Part A are rejected.
Importer of repute will instruct the shipper to send replacement of 10
pcs of Part A on free of charge basis. On getting free replacement,
importer of repute will process the documents under section 74 for
these rejected 10 pcs of Part A for sending it to the shipper. At the
time of export examination, to verify the physical identification of the
material, Customs should examine the new import consignment of
importer arriving at port/airport for Part A. On getting convinced that
Part A being sent back is identical with the new imported Part A
-
8/2/2019 Siam Indian Auto Industry
7/40
(except that earlier was rejected on quality ground), customs should
allow clearance of the export shipment under Section 74 and should
process the refund of duty.
8. Simplification of Notifications
Notifications issued by Departments should be minimum & user
friendly. From the subject itself the user should get the theme of the
notifications.
9. Interest on duty foregone under duty exemption schemes
The Exim Policy provides import of Capital Goods, raw materials,
components, consumables etc. either under concessional duty rate or
at zero duty for carrying out manufacturing activities with time bound
export obligations.
Due to some unavoidable changed circumstances, if the importer is
not able to fulfill the obligation, then importer needs to regularise the
imports on payment of duty + interest @ 15% p.a.
Under the prevailing market conditions, the ruling interest rate is in
the range of 6% to 8% p.a for all types of transactions. To reduce the
burden and to bring down the transaction cost, the interest rate for
regularisation of imports need to be plugged max. @ 10% p.a.
Exporters who undertake the business risks can survive during
uncertainties.
10. Self Assessment for Imports
Excise and Sales tax rules provide opportunity to the assessee to
assess the duty and pay to the government periodically. Only audit
check is done on post payment activities. Government need to come
out with such self assessment schemes which will enable importer to
move the goods from the ports on arrival and pay duty on self
assessment basis. Customs can introduce Audit checks to check
adequacy similar to excise and sales tax.
-
8/2/2019 Siam Indian Auto Industry
8/40
The above will help better utilization of scarce and expensive port
facility and reduce the transaction costs.
The facility needs to be extended for import clearances also. Indian
Port Authorities to look up global standard of operations and eliminate
multiple handling and improving the port productivity levels.
11. Export benefits like DEPB /DGFC / Advance License
The above export incentives are admitted only for exports against
Hard Currency and denied for Rupee trade. As a result Rupee trade
with neighbouring countries are less attractive and as a result fullpotential is not realised. This also affects our competitiveness vis--
vis other countries in these markets. The above export Incentives
need to cover export under rupee trade also, especially with SAFTA
being negotiated currently.
12. Tools Imported For Specific Activity
Calibration equipments and tools brought by Overseas technicians /
specialists for erection, commissioning and serving of equipments
supplied , imports made on re-export basis is liable for Customs duty.
At present the provision is to pay customs duty and claim duty draw
back under Section 74. The process is cumbersome and takes long
lead time. Needs provision to custom clear against bond an
cancellation after re-export
Imports in advance or as baggage be permitted without duty oncondition of re-export.
13. Advanced Technology Has Demerits
Imports under CTH 49.11 attracts Nil duty if imported in Hard copy
form. However, if the same is imported in the form of CD, Customs
duty is applicable. The anomaly needs to be removed Manuals,
drawings et covered under scope of CTH 49.11 if imported in CD ROM,
customs duty to be exempted
-
8/2/2019 Siam Indian Auto Industry
9/40
14. Duty Free Credit Entitlement Licence
Licensing authorities are issuing DFCE licence for service providersserved from India as per para 3.6.4.1 of Foreign Trade Policy 2004-09,
which is cover under Customs Notification 54/2003-cus dated 01-04-
2003.
Whereas the Licensing authorities are not issuing DFCE Licence for
Status Holders (Manufacturer & Exporters), which is covered under
customs notification 53/2003-cus dated 01-04-2003. Even if they have
issued, the licence is not operative, for the reason that Customs are
insisting that the Licence should read as "DFCE issued for Status
Holder", whereas it is mentioned as "Service Provider served from
India Scheme".
Advance Income tax has been paid (approx. 36%) for this accrued
export benefit-DFCE Licence, whereas it is not operational.
The last date for submission of DFCE application for Status Holder has
been extended to 31-03-2005 from 31-12-2004 as per Policy circular
No. 12/2004-09 dated 28-12-2004, which shows the intention of
Licensing authority for issuing DFCE Licence for Status Holders
Suggestion:
1. The licensing authority should consider Manufacturer Exporters
(Status Holder) at par with Service providers served from India, and
issue DFCE Licence, as stated in Exim Policy 2002-2007. For the
Licenses already issued, the amendment as required by Customs"DFCE issued for Status Holder" may please be incorporated in the
Licence, so that it can be made operational.
2. Customs Notification 53/20036 dated 1-4-2003 may be amended
permitting the Status Holder to pay CVD at the time of Import, so as
to enable them to avail Cenvat Credit, as in the case of DEPB Licence
amended as per Cus. Notfn. 96/2004 dated 17-09-2004 (para v & vi).
-
8/2/2019 Siam Indian Auto Industry
10/40
Under Para 3.7.7 of Foreign Trade Policy, for the Target Plus Scheme,
"the CVD Paid in Cash or through debit under the said licence, shall be
adjusted as CENVAT Credit or Duty Drawback as per rules framed byDept. of Revenue."
15. TARGET PLUS Scheme
Even though Target Plus Scheme is announced in the Foreign Trade
Policy 2004-09 on 31-08-2004, the Application form - Appendix 17D is
yet to be provided by the Licensing Authority. Dept of Revenue is
required to issue Customs Notification for the same, with a provision
that CVD paid by cash at the time of importation, by the Status Holder
is eligible for CENVAT Credit as mentioned in the Foreign Trade Policy
Para 3.7.7.
16. Conditions of Import of Vehicles
The existing conditions of import of new and used vehicles should be
retained as such.
AUTO POLICY OF GOVERNMENT OF INDIA
VISION
TO ESTABLISH A GLOBALLY COMPETITIVE AUTOMOTIVE
INDUSTRY IN INDIA AND TO DOUBLE ITS CONTRIBUTION TO
THE ECONOMY BY 2010
1. POLICY OBJECTIVES
This policy aims to promote integrated, phased, enduring and self-sustained growth of the Indian automotive industry. The objectives
are to:-
Exalt the sector as a lever of industrial growth and employment
and to achieve a high degree of value addition in the country.
Promote a globally competitive automotive industry and emerge
as a global source for auto components.
-
8/2/2019 Siam Indian Auto Industry
11/40
Establish an international hub for manufacturing small,
affordable passenger cars and a key center for manufacturing
Tractors and Two-wheelers in the world. Ensure a balanced transition to open trade at a minimal risk to
the Indian economy and local industry.
Conduce incessant modernization of the industry and facilitate
indigenous design, research and development.
Steer India's software industry into automotive technology.
Assist development of vehicles propelled by alternate energy
sources.
Development of domestic safety and environmental standardsat par with international standards.
SIAM welcomed the announcement of Auto Policy, and feels that the
policy would serve as a reference document for all stake holders and
other interested parties.
The Auto Policy has spelt out the direction of growth for the auto
sector in India and addresses most concerns of the automobile sector,
including-
Promotion of R&D in the automotive sector to ensure
continuous technology upgradation, building better designing
capacities to remain competitive.
Impetus to Alternative Fuel Vehicles through appropriate long
term fiscal structure to facilitate their acceptance.
Emphasis on low emission fuel auto technologies and
availability of appropriate auto fuels and
encouragement to construction of safer bus/truck bodies -
subjecting unorganised sector also to 16% excise duty on body
building activity as in case of OEMs
The policy has rightly recognised the need for modernising the parc
profile of vehicles to arrest degradation of air quality. The terminal life
policy for commercial vehicles and move toward international taxing
policies linked to age of vehicles, are steps in the right direction.
-
8/2/2019 Siam Indian Auto Industry
12/40
SIAM has always been advocating encouragement of value addition
within the country against mere trading activity. However, this aspect
has not been fully addressed. The Auto Policy allows automaticapproval for foreign equity investment upto 100% in the automotive
sector and does not lay down any minimum investment criteria.
The recommendation of promoting passenger cars of length upto 3.8
meters through excise benefits is not in line with the free market
concept and may lead to market distortion.
However, with the Auto Policy in place, the automotive industry would
get further fillip to become vibrant and globally competitive. The
industry would get the required support from other Ministries and
departments of Government of India in achieving the goals laid down
in the auto policy.
Home>>Economic Affairs>>Duties& Taxes>>Custom Duty
Heading No
SubHeading No
Description ofarticle
Rate of duty
(1) (2) (3) (4)87.01 Tractors (other than tractors of heading
No. 87.09)8701.10
Pedestrian controlled tractors 10%
8701.20
Road tractors for semi-trailers 10%
8701.30
Track-laying tractors 10%
8101.90
Other 10%
87.02 Motor vehicles for the transport of ten ormore persons, including the driver
8702.10
With compression-ignition internalcombustion piston engine (diesel or semi-diesel)
10%
8702.90
Other 10%
http://www.siamindia.com/Default.aspxhttp://www.siamindia.com/Default.aspx -
8/2/2019 Siam Indian Auto Industry
13/40
87.03* Motor cars and other motor vehiclesprincipally designed for the transport ofpersons (other than those of heading No.87.02), including station wagons andracing carsVehicles specially designed for travelling onsnow; golf cars and similar vehicles
8703.10
Other vehicles, with spark-ignition internalcombustion reciprocating pistons engine
100%
8703.21
Of a cylinder capacity not exceeding 1,000 cc 100%
8703.22
Of a cylinder capacity exceeding 1,000 cc butnot exceeding 1,500 cc
100%
8703.23 Of a cylinder capacity exceeding 1,500cc butnot exceeding 3,000 cc 100%8703.24
Of a cylinder capacity exceeding 3,000 cc
Other vehicles, with compression-ignition
internal combustion piston engine (diesel or
semi-diesel)
100%
8703.31
Of a cylinder capaity not exceeding 1,500 cc 100%
8703.3
2
Of a cylinder capaity exceeding 1,500 cc but not
exceeding 2,500 cc
100
%8703.33
Of a cylinder capacity exceeding 2,500 cc 100%
8703.90
Other 100%
87.04 Motor vehicles for the transport of goods8704.10
Dumper designed for off-highway use 10%
Other, with compression-ignition internalcombustion piston engine (diesel or semi diesel)
10%
8704.21
g.v. w not exceeding 5 tonnes 10%
8704.22
g.v. w exceeding 5 tonnes but not exceeding 20tonnes
10%
8704.23
g.v.w exceeding 20 tonnes
Other, with spark-ignition internal combustion
pistons engine:
10%
8704.31
g.v.w not exceeding 5 tonnes 10%
8704.3 g.v.w exceeding 5 tonnes 10%
-
8/2/2019 Siam Indian Auto Industry
14/40
28704.90
other 10%
87.05 Special purpose motor vehicles, other thanthose principally designed for thetransport of persons or goods (forexample, breakdown lorries, crane lorries,fire fighting vehicles, concrete-mixerlorries, road sweeper lorries, sprayinglorries, mobile workshops, mobileradiological units)
8705.10
Crane lorries 10%
8705.20 Mobile drilling derricks 10%
8705.30
Fire fighting vehicles 10%
8705.40
Concrete-mixer lorries 10%
8705.90
Other 10%
87.06 8706.00
Chassis fitted with engines, for the motorvehicles of heading Nos. 87.01 to 87.05
10%
87.07 Bodies (including cabs), for the motor
vehicles of heading Nos 87.01 to 87.058707.10
For the vehicles of heading No. 87.03 10%
8707.90
Other 10%
87.08 Parts and accessories of the motorvehicles of heading Nos 87.01 to 87.05
8708.10
Bumpers and parts thereof
Other parts and accessories of bodies (including
cabs):
10%
8708.21
Safety seat belts 10%
8708.29
Other
Brakes and servo-brakes and parts thereof
10%
8708.31
Mounted brake linings 10%
8708.39
Other 10%
8708.4 Gear boxes 10%
-
8/2/2019 Siam Indian Auto Industry
15/40
08708.50
Drives axles with differential, whether or notprovided with other transmission components
10%
8708.60
Non-Driving axles and parts thereof 10%
8708.70
Road wheels and parts and accessories thereof 10%
8708.80
Suspension shock-absorbers
Other parts and accessories
10%
8708.91
Radiators 10%
8708.9
2
Silencers and exhaust pipes 10%
8708.93
Clutches and parts thereof 10%
8708.94
Steering wheels, steering columns and steeringboxes
10%
8708.99
Other 10%
87.09 Works trucks, self-propelled, not fittedwith lifting or handling equipment, of thetype used in factories, warehouses, dockareas or airports for short distancetransport of goods; tractors of the typeused on railway station platforms; parts ofthe foregoing vehicles
Vehicles :
8709.11
Electrical 10%
8709.19
Other 10%
8709.9
0
Parts 10%
87.10 8710.00
Tanks and other armoured fightingvehicles, motorised, whether or not fittedwith weapons, and parts of such vehicles
Free
87.11* Motorcycles (including mopeds) and cyclesfitted with an auxiliary motor, with orwithout side-cars; side- cars
8711.10
With reciprocating internal combustion pistonsengine of a cylinder capacity not exceeding 50cc
100%
8711.2 With reciprocating internal combustion piston 100
-
8/2/2019 Siam Indian Auto Industry
16/40
0 engine of a cylinder capacity exceeding 50 ccbut not exceeding 250 cc
%
8711.30
With reciprocating internal combustion pistonengine of a cylinder capacity exceeding 250 ccbut not exceeding 500 cc
100%
8711.40
With reciprocating internal combustion pistonengine of a cylinder capacity exceeding 500 ccbut not exceeding 800 cc
100%
8711.50
With reciprocating internal combustion pistonengine of a cylinder capacity exceeding 800 cc
100%
8711.90
Other 100%
87.12 8712.0
0
Bicycles and other cycles (including
delivery tricycles), not motorised
10%
87.13 Invalid carriage, whether or not motorisedor otherwise mechanically propelled
8713.10
Not mechanically propelled 10%
8713.90
Other 10%
87.14 Parts and accessories of vehicles ofheading Nos. 87.11 to 87.13Of motorcycles (including mopeds)
8714.1
1
Saddles 10%
8714.19
Other 10%
8714.20
Of invalid carriages
Other :
10%
8714.91
Frames and forks, and parts thereof 10%
8714.92
Wheel rims and spokes 10%
8714.93 Hubs, other than coaster braking hubs and hubbrakes, and free-wheel sprocket wheels 10%
8714.94
Brakes, including coaster braking hubs and hubsbrakes, and parts thereof
10%
8714.95
Saddles 10%
8714.96
Pedals and crank-gear, and parts thereof 10%
8714.99
Other 10%
87.15 8715.0
0
Baby carriages and parts thereof 10%
-
8/2/2019 Siam Indian Auto Industry
17/40
87.16 Trailers and semi-trailers; other vehicles,not mechanically propelled; parts thereof
8716.10
Trailers and semi-trailers of the caravan type,for housing or camping
10%
8716.20
Self-loading or self-unloading trailers and semi-trailers for agricultural purposes
10%
Other trailers and semi-trailers for the transportof goods:
8716.31
Tanker trailers and tanker semi-trailers 10%
8716.39
Other 10%
8716.4
0
Other trailers and semi-trailers 10%
8716.80
Other vehicles 10%
8716.90
Parts 10%
* Custom Duty for items falling under 8703 & 8711, If imported as Completely Knocked Down (CKD) unit 10%
If imported CKD kit contained prefabricated engine, gear box
and transmission system 30%
If imported in any other form/ new 60%
SIAM suggestions for VAT Implementation
1. VAT in all States
VAT system of taxation required to be implemented simultaneously
throughout the country in all States and Union Territories at the same
time. This will avoid serious market distortions and enhances
industry's competitiveness.
2. Uniform VAT Law and procedure
India has often been described as a country with large market. But
unfortunately this large market has been highly fragmented by inter-
state barriers. It is further complicated by State specific law on sale of
goods. The wide divergence in the structure and practice has
hampered free flow of goods and services within the country and
-
8/2/2019 Siam Indian Auto Industry
18/40
effected competitiveness of Indian Industry.
Homogeneity is the essence of VAT and all States should cometogether to accept a common law under VAT. All forms, returns &
declarations should be common to avoid artificial barriers and
complexities.
3. State VAT Rate and Classification of goods
Uniform rate structure across the country helps in avoiding diversion
of trade from one State to another, checks unhealthy competition and
reduces tax evasion. It helps automobile industry to plan and commit
long term investments.
Basic rationale needs to be developed for generation of revenue from
industrial products. This should be long term and the share of taxation
in the total value of the ultimate customer needs to be defined. SIAM
recommends such a policy in taxing goods and services under VAT.
Total taxes from both Centre and State as proposed by SIAM not to
exceed 25%. Considering Cenvat at 16%, Designated rate should not
exceed 9%.
The classification of goods should be aligned to central taxes to
reduce litigation. Uniform classification across all States and central
taxes would create favourable environment for growth of industry. No
separate classification of Capital Goods
4. Multiple levies and Industrial input
One of the stated objectives of VAT is to reduce multiple levies.
Number of rates under VAT should be 0%, 4% & RNR in addition to 1%
on precious metal and 20% on petroleum products. All other levies
like Octroi, Entry Tax should be abolished.
Inputs used in the manufacturing should be taxed at 4% against issue
-
8/2/2019 Siam Indian Auto Industry
19/40
of declaration. There should not be any specific list of industrial input,
as it will deprive the benefit to the industry using input other than the
one mentioned in the list. Reduced rate on industrial input will avoidrefund problem and avoid unnecessary interaction with the
Department.
Further when interstate transactions are zero rated, manufacturer
selling predominantly in interstate ends up having huge input tax
credit without set-off. Automobile manufacturers having one
manufacturing facility in the country sells more than 80% of the
production outside the Sate and forced to seek refund from the StateGovernment for excess input tax credit. SIAM suggests VAT rate of 4%
on all industrial input to mitigate the refund issue.
5. Set-off mechanism
Set-off of tax paid should be allowed for all inputs including raw
material, components, consumables, fuel and capital goods. Tax paid
on services should be allowed to be set-off. Tax paid on capital goods
should be allowed as set-off in full in the same year to avoid confusion
and litigation later.
6. Interstate transactions
All interstate transactions should be at zero rate.
Further automobile manufacturers 'Stock Transfer' goods by setting
up huge facilities to strengthen distribution net work in order to reachthe product to the customer at the earliest and at least cost. This
mechanism should not be affected even under VAT.
7. Sales Tax Incentives
Automobile manufacturers have made huge investments, which are in
phases in unviable locations. These locational disadvantages are
partially offset by fiscal incentives. Any detrimental variations or
-
8/2/2019 Siam Indian Auto Industry
20/40
withdrawal will affect the viability of such investments. This may
adversely impact the country's image as an attractive investment
destination. It is heartening to note that all States have agreed inprinciple to honour all existing incentives under VAT
SIAM suggests the following:
Incentive SIAM Suggestion
Input Tax Exemption . Refund Input Tax separately - adopt Maharashtramodel
Output Tax Exemption Continue exemption, Option to Defer output tax
Output Tax Deferral Continue Deferment, refund input tax separately.
Input Tax Exemption &Output Tax Exemption
Refund Input Tax separately,Option to Defer outputtax
Input Tax Exemption &Output Tax Deferral
Refund Input Tax separately,Option to Defer outputtax
8. Refunds
Due to various reasons there is no alternative but to seek refund from
the Government in case of excess credit. Given the state of finances,
refunds will be difficult and uncertain while locking up working capital
for industry.
Refunds should be honoured within 15 days from the date of filing
returns and credited to the assessee's account.
Alternatively, VAT Entitlement Certificate on the lines of freely
tradable DEPB may be considered.
9. Industry Representation
Empowered Committee may consider inducting industry
representation in the committee for transparency and smooth
introduction of VAT.
-
8/2/2019 Siam Indian Auto Industry
21/40
Highlights of Union Budget 2007- 08
A. Main Highlights
Budget focused on Agriculture, infrastructure and social sector.
Plan allocation increased by 18% - However, Capital
expenditure increase only 9% against Revenue expenditure
increase of 20%.
Focus on Roads including NHDP allocation which is 7.2%; PPP
model to be encouraged further.
Increased outlay on JNURM from Rs 4595 cr to Rs 4987 cr.
Use of Foreign Exchange reserve for infrastructure finance.
Emphasis on developing skilled and trained manpower;
Increased funds and Interest free loan for upgradation of ITIs.
Setting up of Green House Gas Emission Committee.
B. Excise Duty Structure (in %)
Bio-Diesel is exempted from excise duty.
C. Customs Duty Structure
Peak Rate of Customs Duty reduced to 10% from 12.5%.
Customs Duty on various Components & Raw Materials reduced.
D. Central Sales Tax
CST reduced to 3% from 4%.
GST to be introduced with effect from April 1, 2010.
E. Education Cess
Additional Cess of 1% on all taxes for secondary and higher
education.
2% Education Cess continued on Income Tax, Corporate Tax,
Customs Duty, Excise Duty & Service Tax.
F. Direct Taxes
-
8/2/2019 Siam Indian Auto Industry
22/40
Weighted deduction for R&D U/s 35(2AB) of Income Tax Act
extended for a period of five years.
No change in rate of Income Tax on individuals or firms. Personal Income Tax exemption raised by Rs 10,000.
Increase in Dividend Distribution Tax from 12.5% to 15%.
Bringing of ESOPs under FBT.
G. Service Tax
No change in the Service Tax rate.
Service tax net widened; Service tax imposed on design
services.
WTO NAMA Discussions
WTO negotiations on Industrial Goods have progressed in Geneva
based on the Framework Agreement signed in August 2004. The
discussions have mainly been technical. However, the mini-ministerial
at Davos, which was attended by 30 trade ministers, including Mr
Kamal Nath, Minister of Commerce, Govt of India has given a very
strong political push to these negotiations.
The following is the state of progress of NAMA negotiations till the
Trade Negotiations Committee Meeting on February 14, 2005.
Product Coverage: The main discussion on this has been what all
products will NAMA cover. There is still some discussion on whetherfish and fish products should be sent into agriculture or should they
remain in the realm of industrial goods. This is because fish and fish
products is one of the products that has been identified for sectoral
initiative of zero for zero.
There is also this issue of deciding which of the environmental goods
will be taken into the NAMA negotiations for reduction/elimination of
tariffs. The environmental goods negotiations are done under the
-
8/2/2019 Siam Indian Auto Industry
23/40
Trade and Environment Committee and not Negotiating Group on
NAMA.
Bound vs. Unbound: Many countries (all developed and many Latin
American Countries) have called for complete binding of all tariffs by
all countries. They also want LDCs to bind their tariffs without
providing for any tariff reductions. India has, however, said in these
discussions that there cannot be automatic binding of all tariffs.
Sensitive products will have to remain unbound, India said. Philippines
and Kenya share this view.
EU has said that if any country wants to use the exceptions given in
the Framework Agreement then these exceptions will have to be
compensated in other areas. EU said that the level of ambition in the
Doha Round should not be compromised at any cost.
Formula: There is not much progress on the formula on the ground.
However, USTR Robert Zoellicks statement at the Davos mini-
Ministerial that there can be two coefficients for the formula - one for
developing countries and the other for the developed countires - hasstarted a debate in WTO circles. The effect of such formula is
supposed to ensure that all high tariffs are cut more substantially
than low tariffs, but the separate coefficient for developing countries
will allow them to bring their tariffs to a higher absolute ceiling than
developed countries.
US negotiators have, however, indicated that application of such
formula will mean reduction in flexibilities. Flexibilities include keepinga percentage of tariffs outside the bound level or keeping some
products out of the formula for lower cuts, both of which is included in
the Framework Agreement.
The EU felt that this can possibly bring down the level of ambition in
the Doha Round. They said that the Framework Agreement in itself
provides for enough flexibility.
-
8/2/2019 Siam Indian Auto Industry
24/40
Treatment of Unbound Formula: There is no consensus on the way
to proceed. Countries like India have insisted that some sensitive
products have to be left unbound while many countries havequestioned this. Countries like Peru and Ecuador have asked all
developing countries to bind 100% of their tariffs.
US said that the problem of having unbound tariffs is only with 30
countries and therefore it can only be an exception but not the rule.
Reactions from Various Countries:
India: Developing countries should be given the flexibility to cut less
than what the developed countries cut tariffs. There should be a
window for keeping sensitive products unbound as well.
Jamaica/Cuba/ Costa Rica: Larger implementation period required
for deeper cuts. Different coefficients should be applied for
developing and developed countries.
Kenya: Without flexibility the word development will elude the
negotiations. Level of ambition should be on development perspective
of the Round.
Sectoral Initiative: There is need for flexibility while deciding on
sectoral, is what most developing countries are saying. But flexibility
means different things to different countries.
Latin America including Brazil seems okay with sectoral initiatives(zero for zero) if it is voluntary.
Switzerland is for the critical mass approach.
US has said that sectoral initiative is key to any tariff reduction
formula to be agreed.
What is Voluntary Approach in Sectoral Initiatives? Voluntary
-
8/2/2019 Siam Indian Auto Industry
25/40
will mean that countries can choose if they want to join the sectoral
initiative or not. But if they decide to join then they will have to do so
for all sectors that are brought under the sectoral initiative. Ifcountries decide to stay away from the sectoral initiative then they
will have to pay a MFN duty for export of those products, which will be
fixed during the negotiations.
Sectors will have to be negotiated but as of now the products that
were decided earlier still stand - auto components, electrical and
electronic products, footwear and leather goods, textiles and clothing,
fish and fish products and gems and jewellery.
But the US and Japan want more products added to this list.
What is critical mass approach? In a meeting held last week it was
decided that they would look at the same approach that was taken for
the Information Technology Agreement. They feel that countries that
account for 80 per cent of total global trade in the product will be part
of the critical mass. Those outside can choose to join or not. India
may be included in every sector if this approach is accepted.
Special Provisions for Newly Acceded Countries: China has been
leading this discussion and has said that newly acceded countries will
need a completely different coefficient that will have smaller cuts in
tariffs and longer implementation periods for these cuts.
Elimination of Low Duties: Most developed countries have
demanded that all countries must eliminate any low tariff completelyto provide immediate market access opportunities in global trade.
Most developing countries have rejected this proposal. Kenya
specifically said that it was important for developing countries to keep
nuisance tariffs.
Nonreciprocal Preferences: There have been short discussions on
this issue. Many countries that do not receive such preferences have
-
8/2/2019 Siam Indian Auto Industry
26/40
said that they need to be removed. However, there is a lot of support
for such non-reciprocal preferences especially from ACP countries that
receive such preferences from EU.
Non-tariff Barriers: Two papers were presented on non-tariff
barriers. One of the papers was from US on automobiles and another
from US and New Zealand on wood products.
India and many other developing countries have called for higher
attention to this area of negotiations.
India has submitted a proposal jointly with Brazil and Argentina on
Tariffs:
Communication to the Negotiating Group on Non-Agricultural
Market Access from Argentina, Brazil & India
1. The Framework contained in Annex B to the July Framework
Agreement represents the mandate provided for the non-agricultural
products negotiations in paragraph 16 of the DMD. Accordingly, theformula shall reduce tariff peaks, high tariffs and tariff escalation and
take fully into account less than full reciprocity in reduction
commitments and special & differential treatment for developing
countries.
2. The concepts of less than full reciprocity in reduction
commitments and special & differential treatment are different:
(i) Less than full reciprocity in reduction commitments has to be an
in-built component of the formula and would be achieved through the
incorporation of sufficiently higher coefficients for developing
countries as compared to developed countries, resulting in higher
percentage reductions for developed countries and taking into
account the differences in tariff profile amongst members;
(ii) Special & differential treatment relates to flexibilities in the
-
8/2/2019 Siam Indian Auto Industry
27/40
application of the formula, including longer implementation periods,
less than formula cuts and the exclusion of some tariff lines. The
present structure of the S&D provisions in the Framework contained inparagraph 8 of Annex B is the minimum necessary to meet the
development goals of the developing countries in this regard.
3. Harmonization of tariffs is not an objective of this Round. It has not
been envisaged in the Mandate and was not included in the July
Framework as one of the necessary features of the formula.
Harmonizing the customs tariffs amongst countries with differing
industrial/ economic structures and with varying societal needs is notdesirable and would not deliver the development objective of the
Round.
4. After consideration of the various formulae proposed for these
negotiations, a Swiss type formula incorporating each countrys tariff
average seems best suited to address the mandate in its entirety. This
could be expressed as:
where,
t1 is the final rate, to be bound in ad valorem terms
t0 is the bound base rate
ta is the average of the current bound rates
B is a coefficient, its value(s) to be determined by the participants
The defining features of this formula are as follows: - The formula
would apply to bound tariff lines; and - The coefficient B will be
modulated to reflect the ambition in other areas relevant to market
access agreed to for this Round;
5. All non-ad valorem duties shall be converted to ad valorem
-
8/2/2019 Siam Indian Auto Industry
28/40
equivalents before the adoption of the formula, and bound in ad
valorem terms.
6. This is an equitable formula as it takes into account the present
tariff commitments of Members. It improves the tariff profiles by
compressing the dispersion of tariffs within each Member. It is
transparent as it uses a well known factor, each Members tariff
average, as the basis. It seeks to match the ambition level in all areas
of market access negotiations in the WTO, with the inclusion of a B
factor. The overall reduction commitment it imposes in percentage
terms is proportional amongst developed and developing countries,removing the shortcoming in the simple Swiss formula that imposes
much greater reduction requirements on the participating developing
countries.
7. The impact of any tariff reduction formula depends on the numbers
which are the essence of the formula. At this stage the important
consideration is whether the formula by its nature complies with the
mandate, i.e. whether it reduces or eliminates tariff peaks, high
tariffs, and tariff escalation taking fully into account the special needs
and interests of developing and least-developed country participants,
including through less than full reciprocity in reduction commitments.
We believe the above formula is still the most appropriate because:
It is based on the current tariff profile;
It has an element of progressivity in national tariffs;
It allows for less than full reciprocity in reduction commitments; and
Its liberalizing effect can be adjusted by variations in the coefficient
B.
8. Having agreed on the basic structure of the formula, Members
would have to address the part of the mandate related to Special and
Differential treatment for developing country participants in the
-
8/2/2019 Siam Indian Auto Industry
29/40
application of the formula on current bound tariffs. Particular
sensitivities of developing countries would be attended by longer
implementation periods, less than formula cuts for some tariff linesand the exclusion of some tariff lines from any formula cut. The
figures related to those flexibilities would have to be negotiated after
an agreement on the formula itself.
Treatment of Unbound Tariff Lines
9. Increasing the binding coverage to 100% is a desirable objective
for this Round. However, it must be recognized that appropriateflexibilities are required by developing countries to achieve this
objective. The average as on the base date of presently unbound lines
will be marked up by x times, which shall be negotiated as indicated
in the framework agreement. Thereafter, the marked up unbound
tariff lines could be bound at an average level after the application of
the formula. Developing country Members would then have the
flexibility to fix individual tariff lines around this average. The formula
for unbound tariff lines will be slightly modified i.e., the formula would
apply only on the tariff average and not on a line by line basis. The
modified formula for unbound tariff lines shall be as follows:
Where:
tA1 is the average for newly bound lines
xtA is the marked up tariff average of MFN applied rates as on the
base date
tA is the tariff average of MFN applied rates as on the base date
B is a coefficient, its value(s) to be determined by the participants
-
8/2/2019 Siam Indian Auto Industry
30/40
Members covered by paragraphs 6&9 of Annex B of the framework
shall not undertake tariff reductions in this Round. Members shouldalso recognize liberalisation recently undergone by newly acceded
members.
1. POLICY OBJECTIVES
This policy aims to promote integrated, phased, enduring and self-
sustained growth of the Indian automotive industry. The objectives
are to:-
(i) Exalt the sector as a lever of industrial growth and employment
and to achieve a high degree of value addition in the country;
(ii) Promote a globally competitive automotive industry and emerge
as a global source for auto components;
(iii) Establish an international hub for manufacturing small, affordable
passenger cars and a key center for manufacturing Tractors and Two-
wheelers in the world;
(iv) Ensure a balanced transition to open trade at a minimal risk to the
Indian economy and local industry;
(v) Conduce incessant modernization of the industry and facilitate
indigenous design, research and development;
(vi) Steer India's software industry into automotive technology;
(vii) Assist development of vehicles propelled by alternate energy
sources;
(viii) Development of domestic safety and environmental standards at
par with international standards.
2. BACKGROUND
-
8/2/2019 Siam Indian Auto Industry
31/40
2.1 Automotive industry has universal5ly emerged as an important
driver in the economy. Although the automotive industry in India is
nearly six decades old, until 1982, only three manufacturers - M/s.Hindustan Motors, M/s. Premier Automobiles and M/s. Standard Motors
tenanted the motor car sector. Owing to low volumes, it perpetuated
obsolete technologies and was out of sync with the world industry. In
1982, Maruti Udyog Ltd. (MUL) came up as a government initiative in
collaboration with Suzuki of Japan to establish volume production of
contemporary models. After the lifting of licensing in 1993, 17 new
ventures have come up of which 16 are for manufacture of cars. This
industry currently accounts for nearly 4% of the GNP and 17% 0f theindirect tax revenue.
3. EXTANT POLICY
3.1 Before the removal of QRs with effect from 01-04-2001, the policy
placed import of capital goods and automotive components under
open general licence, but restricted import of cars and automotivevehicles in Completely Built Unit (CBU) form or in Completely Knocked
Down (CKD) or in Semi Knocked Down (SKD) condition. Car
manufacturing units were issued licences to import components in
CKD or SKD form only on executing a Memorandum of Understanding
(MOU) with the Director General Foreign Trade (DGFT). 11 companies
signed MOUs with DGFT under which they agreed to:
i. Establish actual production of cars and not merely
assemble vehicles;
ii. Bring in a minimum foreign equity of US $ 50 Million if a
joint venture involved majority foreign equity ownership;
iii. Indigenise components upto a minimum of 50% in the
third and 70% in the fifth year or earlier from the date of
clearance of the first lot of imports. Thereafter the MOU
and import licensing will abate;
-
8/2/2019 Siam Indian Auto Industry
32/40
iv. Neutralise foreign exchange outgo on imports (CIF) by
export of cars, auto components etc. (FOB). This
obligation was to commence from the third year of start ofproduction and to be fulfilled during the currency of the
MOU. From the fourth year imports were to be regulated
in relation to the exports made in the previous year.
4. CURRENT STATUS OF INDIAN AUTOMOTIVE INDUSTRY
4.1 The industry encompasses commercial vehicles, multi-utilityvehicles, passenger cars, two wheelers, three wheelers, tractors and
auto components. There are in place 15 manufacturers of cars and
multi utility vehicles, 9 of commercial vehicles, 14 of Two/Three
Wheelers and 10 of Tractors besides 5 of engines. With an investment
of Rs.50,000 crores, the turnover was Rs. 59,500 crores in Automotive
Sector during 1999-2000. It employs 4,50,000 people directly and
100,00,000 people indirectly and is now inhabited by global majors in
keen contention.
4.2 India manufactures about 38,00,000 2-wheelers, 5,70,000
passenger cars, 1,25,000 Multi Utility Vehicles, 1,70,000 Commercial
Vehicles and 2,60,000 tractors annually. India ranks second in the
production of two wheelers and fifth in commercial vehicles.
4.3 Indias automotive component industry manufactures the entire
range of parts required by the domestic automobile industry and
currently employs about 250,000 persons. Auto component
manufacturers supply to two kinds of buyers original equipment
manufacturers (OEM) and the replacement market. The replacement
market is characterised by the presence of several small-scale
suppliers who score over the organised players in terms of excise duty
exemptions and lower overheads. The demand from the OEM market,
on the other hand, is dependent on the demand for new vehicles.
-
8/2/2019 Siam Indian Auto Industry
33/40
4.4 The auto sector (excluding Tractors) attained a steep cumulative
annual growth of 22% between 1992 and 1997. The Tractors achieved
a cumulative annual growth of 16%. Component production grew by28%. There has been a slowdown in the automobile sector in the past
two years. However, the component industry maintained a low but
positive growth rate mainly due to its export performance. Over the
years, the component industry has maintained a 10% - 12% share of
exports in the total production.
4.5 Roads occupy an eminent position in transportation as they, as
per the present estimate, carry nearly 65% of freight and 87% of
passenger traffic. Although, India has 3.3 million kilometers of road
network, which is the second largest in the world, the Indian highways
are getting overpopulated. Traffic management and road sense also
need attention.
5. NEED FOR A COMPREHENSIVE AUTOMOTIVE POLICY
5.1 The extant policy has drawn many overseas companies into India
but needs to be more investor friendly, address emerging problemsand be WTO compatible. The Indian car market is full of possibilities;
but present demand profile inhibits volume production, save by a few,
and conduces contention rather than competition. World over, the
majors have consolidated to elevate technology, enlarge product
range, access new markets, cut costs and ingraft versatility. They
have resorted to common platforms, modular assemblies and systems
integration by component suppliers and E-Commerce.
5.2 The automotive industry is in the midst of a major structural
transformation in today's globalised scenario. "System Supply" of
integrated components and sub-systems is becoming the order of the
day, with individual small components being supplied to the system
integrators instead of the vehicle manufacturers. In this process, most
of the SSI units manufacturing smaller individual components are on
their way to become tier 2 and tier 3 suppliers, while the larger
companies including most MNCs are being transformed into tier 1
-
8/2/2019 Siam Indian Auto Industry
34/40
companies, which purchase from tier 2 & 3, and sell to the auto
manufacturers.
5.3 Indian auto sector needs to grow collaterally and in harmony with
world industry. India has the potential to be a global automotive
power. However, concerted efforts will be required to take auto
manufacturing to a self-sustaining level where they shall have
volumes, generate requisite technology and meet evolving emission
requirements.
5.4 Volume is important for any manufacturing enterprise. However, it
is more important for automobile sector, both for the manufacture of
vehicles as well as auto components. Lack of volume will not only
inhibit efficient manufacture but also R&D and introduction of new
models. The investment and fiscal policies should create an
environment for volume production and indigenous capability for
innovation for small cars and auto components.
5.5 Auto components manufacturers have been slowly gaining global
recognition and maintaining a certain level of exports despite therecent downturn. It should be possible to achieve an export target of
US $ 1 billion by 2005 and US $ 2.7 billion by 2010. This would require
three pronged marketing strategy: exports through OEMs for their
global sourcing requirements, export to tier I manufacturers as a part
of their international supply chain and direct exports to aftermarket.
The main challenges are lower volume low scale, fragmentation,
inadequate R&D/technology support, lower productivity levels, limited
resources for international marketing and establishment of an
efficient supply chain.
6. MEASURES TO REALIZE THE POLICY OBJECTIVES
6.1 Initiatives relating to investment, tariffs, duties and imposts will
be the instruments to achieve the Policy objectives. These path
governments economic reform and are in harmony with the
commitments made to WTO.
-
8/2/2019 Siam Indian Auto Industry
35/40
6.2 Increased resource allocation to the highways sector to ensure
collateral upgradation and development of road infrastructure in step
with the increase in the population of vehicles.
6.3 An appropriate regulatory framework for smooth movement of
traffic, safety and environmental aspects.
7. FOREIGN DIRECT INVESTMENT
7.1 Automatic approval for foreign equity investment upto 100% of
manufacture of automobiles and component is permitted.
8. IMPORT TARIFF
8.1 The incidence of import tariff will be fixed in a manner so as to
facilitate development of manufacturing capabilities as opposed to
mere assembly without giving undue protection; ensure balanced
transition to open trade; promote increased competition in the market
and enlarge purchase options to the Indian customer.
8.2 The Government will review the automotive tariff structure
periodically to encourage demand, promote the growth of the
industry and prevent India from becoming a dumping ground for
international rejects.
8.3 In respect of items with bound rates viz. Buses, Trucks, Tractors,
CBUs and Auto components, Government will give adequate
accommodation to indigenous industry to attain global standards.
8.4 In consonance with Auto Policy objectives, in respect of unbound
items i.e., Motor Cars, MUVs, Motorcycles, Mopeds, Scooters and Auto
Rickshaws, the import tariff shall be so designed as to give maximum
fillip to manufacturing in the country without extending undue
protection to domestic industry.
8.5 The conditions for import of new Completely Built Units (CBUs),
will be as per Public Notice issued by the Director General Foreign
Trade (DGFT) having regard to environment and safety regulations.
-
8/2/2019 Siam Indian Auto Industry
36/40
8.6 Used vehicles imported into the country would have to meet
CMVR, environmental requirements as per Public Notice issued by
DGFT laying down specific standards and other criteria for suchimports.
8.7 Appropriate measures including anti dumping duties will be put in
place to check dumping and unfair trade practices.
9. EXCISE DUTY
9.1 Motor Cars
9.1.1 The ownership of cars in India is just 6 per thousand
of population as against 500 in the developed economies.
The contribution of the auto sector to the GDP and
employment is likewise low. Expansion of local demand
holds great potential and is vital to install scale volumes
of production.
9.1.2 Domestic demand mainly devolves around small
cars not exceeding 3.80 meters in length. Small cars
occupy less of road space and save on fuel. These capture
more than 85% of the market. India can build export
capability and become an Asian hub for export of small
cars. The growth of this segment needs to be spurred.
9.2 Multi Utility Vehicles
9.2.1 MUVs are an important mode of economical mass
transport in rural India due to poor road infrastructure and
lack of good State transport system. They are the first
vehicle purchased by a number of farmers, traders, small
businessmen in rural and semi-urban markets. The
Government will endeavour to provide fiscal incentives to
this sector.
-
8/2/2019 Siam Indian Auto Industry
37/40
9.3 Commercial Vehicles
9.3.1 Presently excise duty on commercial vehicles soldby a manufacturer whether as a chassis or with a
complete body is 16%. However, no duty is levied on the
body that is built by an independent body builder on
chassis bought from a manufacturer. This dispensation
inveigles production of the complete trucks and buses by
the chassis manufacturer and is detrimental to safety
standards. The duty imposed on the construction of
bodies by an independent body builder, small or
organised sector, shall be equal to that of bodies built by
a chassis manufacturer.
9.3.2 The Government will encourage fabrication of bus
body on bus chassis designed for better passenger
comfort instead of truck chassis as is the current practice.
9.3.3 The Government will promote the use of multi-axle
vehicles for carriage of goods as they cause reducedenvironmental pollution and lesser wear and tear on road
surface in comparison to the existing 2-axle trucks.
10. IMPROVING ROAD INFRASTRUCTURE
10.1 Traffic on roads is growing at a rate of 7 to 10% per annum while
the vehicle population growth for the past few years is of the order of
12% per annum. Poor road infrastructure and traffic congestion can
be a bottleneck in the growth of vehicle industry. A balanced and
coordinated approach will be undertaken for proper maintenance,
upgradation and development of roads by encouraging private sector
participation besides public investment and incorporating latest
technologies and management practices to take care of increase in
vehicular traffic.
-
8/2/2019 Siam Indian Auto Industry
38/40
10.2 For the convenience of traveling public the Government shall
also promote multi-modal transportation and the implementation of
mass rapid transport systems.
11. INCENTIVE FOR RESEARCH AND DEVELOPMENT
11.1 The Government shall promote Research & Development in
automotive industry by strengthening the efforts of industry in this
direction by providing suitable fiscal and financial incentives.
11.2 The current policy allows Weighted Tax Deduction under I.T. Act,
1961 for sponsored research and in-house R&D expenditure. This willbe improved further for research and development activities of
vehicle and component manufacturers from the current level of 125%.
11.3 In addition, Vehicle manufacturers will also be considered for a
rebate on the applicable excise duty for every 1% of the gross
turnover of the company expended during the year on Research and
Development carried either in-house under a distinct dedicated entity,
faculty or division within the company assessed as competent and
qualified for the purpose or in any other R&D institution in the
country. This would include R & D leading to adoption of low emission
technologies and energy saving devices.
11.4 Government will encourage setting up of independent auto
design firms by providing them tax breaks, concessional duty on
plant/equipment imports and granting automatic approval.
11.5 Allocations to automotive cess fund created for R&D ofautomotive industry shall be increased and the scope of activities
covered under it enlarged.
12. BUILDING BYE LAWS FOR RESIDENTIAL, COMMERCIAL AND
OTHER USES
12.1 With the growth of vehicles, smooth traffic movement has come
under severe strain. The problem has been aggravated because of
-
8/2/2019 Siam Indian Auto Industry
39/40
inadequate provision of parking facilities generally. Starting with
metropolitan and important towns, the Government will pursue with
State Governments and Local bodies amendments to bye laws forupward revision of the parking norms for new residential buildings,
construction of common parking for existing residential areas besides
parking upgradation in all commercial areas. Multi-storied parking
shall also be encouraged.
13. ENVIRONMENTAL ASPECTS
13.1 The automotive and oil industry have to heave together to
constantly fulfill environment imperatives. The Government will
continue to promote the use of low emission fuel auto technology.
13.2 The Government after considering the recommendations of the
Expert Committee on Auto Fuel Policy headed by Dr. R.A. Mashelkar,
have approved a road map for implementation for the auto fuel
quality consistent with the required levels of vehicular emissions
norms and environmental quality. The Government will formulate a
comprehensive auto fuel policy covering the other related aspectsand ensure availability of appropriate auto fuel/fuel mixes at minimum
social costs across the country. Suitable institutional mechanism will
be put in place for certification, monitoring and enforcement of
different technologies/fuel mixes. Appropriate fiscal measures will be
devised to achieve milestones in the roadmap for implementation of
auto fuel policy.
13.3 In the short run, the Government will encourage the use of short
chain hydrocarbons along with other auto fuels of the quality
necessary to meet the vehicular emissions norms.
13.4 There is prime need to support the development and
introduction of vehicles propelled by energy sources other than
hydrocarbons by promoting appropriate automotive technology.
Hybrid vehicles and vehicles operating with batteries and fuel cells
are alternatives to the conventional automobile, which in their early
beginnings, lie intreasured. As an impetus for the development of
-
8/2/2019 Siam Indian Auto Industry
40/40
such vehicles, an appropriate long-term fiscal structure shall be put in
place to facilitate their acceptance vis--vis vehicles based on
conventional fuels.
13.5 Internationally, the practice is to levy higher road tax on older
vehicles in order to discourage their use. In India, the road tax on
vehicles varies in nature and quantum among the states. Lifetime
road tax is also in vogue. The endeavour will be to move to the
international model.
13.6 In order to facilitate faster upgradation of environmental quality,
the Govt. will consider having a terminal life policy for commercial
vehicles alongwith incentives for replacement for such vehicles.
14. SAFETY
14.1 Government will duly amend the Central Motor Vehicles Rules,
Bureau of Indian Standards (BIS) and other relevant provisions and
introduce safety regulations that conform to global standards.
14.2 Testing and certification facilities need to be revised and
strengthened in accordance with safety standards of global order.
Government, in partnership with industry, will tend to this
requirement.
15. HARMONISATION OF STANDARDS:
15.1 Government recognises the need for harmonisation of standards
in a global economy and will work towards it.