The Hindu : Business : Auto industry seeks tax holiday, import duty cut

Online edition of India's National Newspaper
Friday, Sep 08, 2006

Business

Business

Auto industry seeks tax holiday, import duty cut

Special Correspondent

SIAM releases draft Automotive Mission Plan

— Photo: Kamal Narang

AUTO MAJORS GATHER: (from left): Brijmohan Lall, Chairman, Hero Honda Motors, Venu Srinivasan, Chairman and Managing Director, TVS Motor Company, Jagdish Khattar, Managing Director, Maruti Udyog, and Anand Mahindra, Vice-Chairman, Mahindra & Mahindra, at the SIAM annual meeting in New Delhi on Thursday.

NEW DELHI: The Indian automotive industry has sought tax holiday for investments exceeding Rs. 500 crore in line with the ones enjoyed by large infrastructure projects even as the Central Government promised to revamp some of the existing export promotion schemes.

In the draft Automotive Mission Plan (AMP) 2006-16, released by the Society of Indian Automobile Manufacturers (SIAM) in the presence of the Heavy Industries and Public Enterprises Minister, Sontosh Mohan Dev, the industry asked for other incentives, including tax deductions of 100 per cent on export profits, one-stop clearances for FDI proposals in the automotive sector and deduction of 30 per cent of net income for ten years for new industrial undertakings.

The industry has also asked for concession on import duty on machinery for setting up of new plant or capacity expansion and deduction of 50 per cent on foreign exchange earnings of automotive companies.

Speaking on the occasion, the Minister assured the industry that the Government would play a key role in facilitating infrastructure creation, promote the country's capability, create a favourable business climate, attract investments and facilitate R&D.

On the sidelines of the SIAM summit here, Tata Motors has indicated that it will invest Rs. 10,000-12,000 crore in India over the next three to four years and is looking at Russia and China for vehicle sales and component sourcing.

Tata Motors Managing Director Ravi Kant told reporters that the company was looking at developing Russia as an important market for light trucks, buses and pick-ups. The company would be assembling its vehicles in Russia.

On China, he said the company was looking at increased component sourcing to bring down costs of vehicle development in India. "We are looking at various geographies to bring down our cost and China is one of these countries,'' Mr. Kant said.

Suzuki and Maruti on Thursday hinted at scaling up of their investment plans for the country by Rs. 3,000 crore, taking the total to Rs. 9,000 crore, and announced they would start contract manufacturing for Nissan from 2008-09.

Suzuki Chief Osamu Suzuki, on a visit to India, said the companies would not only expand operations and production in the domestic market but also gradually use it as a base for exports to other regions, primarily Europe.

"Around 90 per cent of the new investments would be met through internal accruals, while we may have to take loans for the remaining portion,'' Mr. Suzuki told reporters, a day after he along with senior Nissan executives met government officials to seek their support and better infrastructure facilities.

Elaborating on the plans, he said Maruti's new car plant at Manesar, which was expected to begin production soon, would manufacture one lakh units of the `Swift' as well as two lakh units of a new `small car'.

Honda's second plant

Similarly, Japan's Honda Motors said it would set up a second plant in India, which could involve an investment of $200 million over five years. "We are now expanding the capacity at our Greater Noida facility to one lakh units, following which we will set up a new plant with a similar capacity,'' Honda Siel India President and CEO, M. Takedagawa, said.

Printer friendly page
Send this article to Friends by E-Mail

Business