This is no more a hidden fact that Indian automobile industry isn't going through the best of its time. And the recent excise duty cut in the Interim Budget arrived as an effort from the government to provide a much-needed boost to the declining sales. Now, the Federation of Automobile Dealers Association (FADA) is demanding to retain the same benefits in soon-to-be-announced regular budget.
FADA said “All passenger cars irrespective of fuel, engine capacity and size should attract the same rate, 12 per cent, of excise duty.” They have already submitted this pre-budget proposal to Union finance minister Arun Jaitley few days back. Due to continuous slow down in the domestic auto market, the Federation also seeks for some other tax reliefs such as increasing depreciation allowance on passenger vehicles to 33 percent across different segments.
According to a recent survey by a consulting firm for market research and analysis- Frost & Sullivan, the falling sales, negative customer sentiments and unclear future growth has made the environment for the business more difficult not only for the vehicle manufacturers but also for their respective auto dealers.
FADA's automobile retail trade and service industry comprises a network of 9,500 authorised dealerships and their service stations engaged in the 'triple S'- sale, service and spares of vehicles across various segments. They are a crucial part of this whole automotive business and also account for major stakes too.
On the footprints of one provided in 2008 following the world financial crisis, the Federation also sought accelerated depreciation allowance of 60 percent for purchase of commercial vehicles for a period of two years in the Union Budget. And the depreciation allowance on trucks purchased for replacement of over 15-year old vehicles be increased to 60 percent. In addition, a life terminal policy for vehicles may be framed in the eco-friendly interest of clean & green environment, road safety and better traffic condition.
“Given the relatively weak outlook on vehicle sales, dealerships are concerned about the viability of their business,” said Mohit Arora, executive director of J.D. Power Asia Pacific.
Last but not least, the request from FADA also emphasizes on reducing interest rates and to increase credit availability for vehicle purchase as well as working capital of automobile dealerships. “This segment of automotive business having invested over Rs 45,000 crore, provides direct employment to over 7,00,000 people and contributes around Rs 70,000 crore by way of taxes,” FADA said.