Auto industry to benefit from corporate tax revision; will attract FDI in manufacturing sector: ICRA

The automotive industry, which accounts for about half of the country's manufacturing GDP, is likely to be one of the key beneficiaries of corporate tax revision, rating agency ICRA said on Monday

Press Trust of India September 23, 2019 17:24:07 IST
Auto industry to benefit from corporate tax revision; will attract FDI in manufacturing sector: ICRA
  • The reduction of corporate tax rates to globally competitive levels will incentivise OEMs (original equipment manufacturers) and their vendors to increase localisation, which augurs well for the industry, ICRA said

  • Given the increasing US-China trade tensions, revision in corporate tax will attract FDI in the Indian manufacturing sector, as the revised tax structure is now in line with other emerging markets, ICRA said

  • In the current fiscal, the Indian automotive industry, especially passenger vehicle segment, has witnessed one of the worst slides in the last two decades due to multiple factors like tighter financing environment for consumers and liquidity crunch faced by dealerships

New Delhi: The automotive industry, which accounts for about half of the country's manufacturing GDP, is likely to be one of the key beneficiaries of corporate tax revision, rating agency ICRA said on Monday.

The reduction of corporate tax rates to globally competitive levels will incentivise OEMs (original equipment manufacturers) and their vendors to increase localisation, which augurs well for the industry, ICRA said in a statement.

"Given the increasing US-China trade tensions, revision in corporate tax will attract FDI in the Indian manufacturing sector, as the revised tax structure is now in line with other emerging markets," ICRA said.

Auto industry to benefit from corporate tax revision will attract FDI in manufacturing sector ICRA

Representational image. Reuters.

Indian auto manufacturers have imported components worth $17.6 billion during 2019-20 (till now) and this is likely to increase further in 2020-21 given the transitionary phase towards stricter safety and emission norms.

In the current fiscal, the Indian automotive industry, especially passenger vehicle segment, has witnessed one of the worst slides in the last two decades due to multiple factors like tighter financing environment for consumers and liquidity crunch faced by dealerships.

Besides, weak farm income and an overall slowdown in economic activity has impacted consumer sentiments and purchasing behaviour.

"Under the current weak demand conditions, OEMs are expected to pass on some benefits of tax revision to the end consumers. This implies that the price correction in coming months will to an extent address the demand-side issues," ICRA Vice President and Sector Head Pavethra Ponniah said.

Moreover, clarity from the government that there is no further GST/cess revision will help consumers who were waiting for improved clarity prior to their car purchase decision, he added.

Updated Date:

also read

Centre gives approval for plan to manufacture over 5 lakh AK-203 assault rifles in Amethi
India

Centre gives approval for plan to manufacture over 5 lakh AK-203 assault rifles in Amethi

With this move, the firearm will replace the in-service INSAS rifle inducted over three decades ago

Covaxin 50% effective against Delta variant, shows Lancet study
India

Covaxin 50% effective against Delta variant, shows Lancet study

The study assessed 2,714 hospital workers from AIIMS New Delhi, who were most exposed to COVID-19 and were primarily offered the country's indigenous vaccine

Anti-government protesters block bridges, roads in Serbia against new laws 'favouring foreign investors'
World

Anti-government protesters block bridges, roads in Serbia against new laws 'favouring foreign investors'

Skirmishes erupted in Serbia between police and anti-government demonstrators who were protesting against new laws they say favor interests of foreign investors devastating the environment