Trends: Tax holiday for auto industry

FICCI calls for tax holiday for auto industry

Apex industry chamber FICCI has demanded income tax holidays, import duty concessions on machinery and incentivise eco-cars to give a boost to the struggling Indian auto and help the sector double its contribution to the country's GDP from 5 per cent.

Several developing countries like Thailand, Brazil, China and Malaysia are providing liberal assistance and incentives to their automobile sector to attract foreign investment and develop domestic manufacturing capacity, the chamber said.

"Thailand have been providing income tax holidays to their automobile manufacturers for eight years," it said, adding the Indian government could consider providing such tax holidays at least for 5 years for projects worth over Rs 500 crore.

Malaysia have an Industrial Adjustment Fund to assist their automotive industry. Such a fund acquires importance in view of the rising imports of Chinese auto parts in India, it added.

FICCI said the government could consider setting up of industrial adjustment fund, technology acquisition fund and dedicated infrastructure for auto sector. Besides, the government could also give import duty concessions on machinery and export market development assistance, it said.

It said India is a small player in the world automotive market with around 3 per cent share in global production of passenger cars and commercial vehicles (against 12 per cent for China) and 0.6 per cent in world automotive exports.

FICCI also asked the government to retain adequate flexibility in WTO and free trade agreement negotiations for the sector to raise domestic value addition and manufacturing.

February 1, 2009
Source: TheTimes of India
URL:http://economictimes.indiatimes.com/News_by_Industry/FICCIcalls_for_tax_relief_for_auto_Ind/articleshow/4059261.cms