Budget 2012: Automobile industry debates diesel tax
Industry leaders representing a broad spectrum of the automobile industry spoke about the need for continuing the excise deduction on R&D and lower interest rates.
The most dramatic part of the ET's pre-Budget debate on 'What does India's auto sector need for a smoother ride?' in Chennai was when Ford India MD Michael Boneham and former Hyundai India President BVR Subbu took opposing views on whether the government ought to tax diesel vehicles, uncertainty over which has until now frustrated automakers' diesel-related investment plan.
Subbu, who now runs Altius Automotive Technologies, focused on providing power solutions, said he is all for the tax. Reason? "Most automotive manufacturers in this country have earned super normal profits on the diesel vehicle options, without a doubt," he said. Boneham, in line with the automobile industry, said he is against such a tax. "With the growth of the passenger car industry, they are going to consume more fuel. India needs to import more oil. The key point is achieving security," he said.
That's because, he said, diesel is the more efficient of the fuels. In India, the enormous price difference between petrol and diesel is increasingly creating demand for cars that run on the cheaper fuel, diesel. Srivats Ram, MD of the TVS group company Wheels India, then joined the fuel debate by saying that since the tax will be spread over five years of equated monthly instalments, it isn't going to change the consumption habits.
"Two wrongs don't make a right," he said. Subbu then responded by saying that at least the government gets its monies. With the fuel debate showing no signs of abating, the moderator for the day, Abdul Majeed, National Automotive Leader, PricewaterhouseCoopers, deftly steered the panel to the issue of R&D in the automobile industry. Majeed asked the panelists for their views given that the excise deduction on R&D expires in 2012.
Sanjiv Khurana, CFO of Daimler India, said he would want to see an extension of that programme by 10 more years. This, he said, will give companies additional incentives regardless of their size. Khurana also said he would look for more support from the government in terms of a framework for encouraging R&D in the sector. Srivats Ram, pointing out that components account for more than two-thirds of inputs to the final auto product, said his industry asked for the creation of a technology development fund. The issue has been taken up with the Planning Commission.
The intent was for the panel to be representative of key sections of the auto industry - Boneham (cars), Subbu (technology), Srivats Ram (components) and Khurana (commercial vehicles). When Majeed opened the debate asking panelists for their industry outlook, their tale was largely positive. Boneham, for example spoke about how passenger vehicles will grow thrice in volumes to about nine million by 2020 compared to last year.
Therefore, Boneham said "there's a need for an investment-supportive and transparent Budget. The government should get aggressive in terms of infrastructure policies." Last year's first quarter for the auto sector saw a handsome growth of more than 20% in both cars and commercial vehicles sales.
The most dramatic part of the ET's pre-Budget debate on 'What does India's auto sector need for a smoother ride?' in Chennai was when Ford India MD Michael Boneham and former Hyundai India President BVR Subbu took opposing views on whether the government ought to tax diesel vehicles, uncertainty over which has until now frustrated automakers' diesel-related investment plan.
Subbu, who now runs Altius Automotive Technologies, focused on providing power solutions, said he is all for the tax. Reason? "Most automotive manufacturers in this country have earned super normal profits on the diesel vehicle options, without a doubt," he said. Boneham, in line with the automobile industry, said he is against such a tax. "With the growth of the passenger car industry, they are going to consume more fuel. India needs to import more oil. The key point is achieving security," he said.
That's because, he said, diesel is the more efficient of the fuels. In India, the enormous price difference between petrol and diesel is increasingly creating demand for cars that run on the cheaper fuel, diesel. Srivats Ram, MD of the TVS group company Wheels India, then joined the fuel debate by saying that since the tax will be spread over five years of equated monthly instalments, it isn't going to change the consumption habits.
"Two wrongs don't make a right," he said. Subbu then responded by saying that at least the government gets its monies. With the fuel debate showing no signs of abating, the moderator for the day, Abdul Majeed, National Automotive Leader, PricewaterhouseCoopers, deftly steered the panel to the issue of R&D in the automobile industry. Majeed asked the panelists for their views given that the excise deduction on R&D expires in 2012.
Sanjiv Khurana, CFO of Daimler India, said he would want to see an extension of that programme by 10 more years. This, he said, will give companies additional incentives regardless of their size. Khurana also said he would look for more support from the government in terms of a framework for encouraging R&D in the sector. Srivats Ram, pointing out that components account for more than two-thirds of inputs to the final auto product, said his industry asked for the creation of a technology development fund. The issue has been taken up with the Planning Commission.
The intent was for the panel to be representative of key sections of the auto industry - Boneham (cars), Subbu (technology), Srivats Ram (components) and Khurana (commercial vehicles). When Majeed opened the debate asking panelists for their industry outlook, their tale was largely positive. Boneham, for example spoke about how passenger vehicles will grow thrice in volumes to about nine million by 2020 compared to last year.
Therefore, Boneham said "there's a need for an investment-supportive and transparent Budget. The government should get aggressive in terms of infrastructure policies." Last year's first quarter for the auto sector saw a handsome growth of more than 20% in both cars and commercial vehicles sales.
Post a Comment