Union Minister Nitin Gadkari hinted that the government is mulling the idea to impose more tax over and above the already proposed 15% customs duty on select auto components, in an attempt to increase local manufacturing and reduce import.
Make the auto components locally in India or pay more import duty. That was what Union Minister for Road, Transport and Micro, Small and Medium Enterprises, Nitin Gadkari hinted at while addressing the annual technology summit of Automotive Component Manufacturers Association (ACMA). Reiterating the Indian government’s stance to promote Make in India and Made in India, Nitin Gadkari emphasised the need for 100% localisation of auto components.
As the minister said, the Indian auto component industry is considered as one of the shining sectors in the country to achieve the goal of Atmanirbhar Bharat and Make in India. He also added that with the strong capabilities of the auto industry in India, it has been able to achieve around 70% localisation, which needs to be taken to 100% by both the OEMs and auto component makers. “I urge both the auto component makers and the OEMs to increase localisation to 100%,” Nitin Gadkari said adding that “At any cost, we need to stop imports of auto components.”
Higher tax on card
In the Union Budget 2021-2022 presented on 1st February 2021, Finance Minister Nirmala Sitharaman had proposed a 15% hike in import duty on the auto components such as steering, chassis, brakes, and drive transmissions in a bid to curb import from foreign countries, especially from China. The government’s rationale behind this move was to promote local manufacturing.
While proposing this tax increase, Finance Minister Nirmala Sitharaman explained that these auto components are not critical for an automobile and can be made locally instead of importing.
While addressing the virtual summit of ACMA and highlighting the need to reduce imports and increase exports, Nitin Gadkari hinted that the government may further hike the customs duty on auto components to boost local manufacturing over and above the already proposed 15%. He also said that the auto industry has the capabilities to achieve higher localisation without compromising on their quality and cost.
“We are fully competent in all the things. I am requesting automobile manufacturing companies to take it very seriously otherwise for imports of auto components, we will think in the direction to increase more customs duty on that,” added Nitin Gadkari adding that the government has always had a clear policy that it wants to encourage Make in India and Made in India.
The auto industry is a key driver of the Indian economy and one of the top contributors in the manufacturing sector. Emphasising this, Nitin Gadkari said that the domestic auto sector has created employment for more than 50 lakh people across the country through its entire ecosystem and has the potential to employ more than 2.50 crore skilled manpower in near future.
Vehicle scrappage policy
Finance Minister Nirmala Sitharaman proposed the voluntary vehicle scrappage policy for the government and PSU vehicles. Talking about the vehicle scrappage policy that is intended to replace around one crore old and unfit vehicles, Nitin Gadkari said that the government is working actively on framing the final scrappage policy. He said that with the scrappage policy, the availability of raw materials such as steel, plastics, rubber, copper and aluminum among others will also increase, which the auto manufacturers can take advantage of.
While mentioning that the government aims to make India a global automobile manufacturing hub by 2025, Nitin Gadkari said that the government is looking at resolving issues related to the shortage of raw materials such as steel to encourage replacement demand and ease production challenges to support the automobile industry.
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