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Industry performance in 2014-15

Production
The industry produced a total of 23,366,246 vehicles including passenger vehicles, commercial
vehicles, three wheelers and two wheelers in April-March 2015 as against 21,500,165 in April-March
2014, registering a growth of 8.68 percent over the same period last year.
Domestic Sales
The sales of Passenger Vehicles grew by 3.90 percent in April-March 2015 over the same period last
year. Within the Passenger Vehicles segment, Passenger Cars and Utility Vehicles grew by 4.99
percent and 5.30 percent respectively, while Vans declined by (-) 10.19 percent in April-March 2015
over the same period last year.
The overall Commercial Vehicles segment registered a de-growth of (-) 2.83 percent in April-March
2015 as compared to same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew
by 16.02 percent and Light Commercial Vehicles declined by (-) 11.57 percent.
Three Wheelers sales grew by 10.80 percent in April-March 2015 over the same period last year.
Passenger Carriers and Goods Carriers grew by 12.16 percent and 5.27 percent respectively in
April-March 2015 over April-March 2014.
Two Wheelers sales registered growth of 8.09 percent in April-March 2015 over April-March 2014.
Within the Two Wheelers segment, Scooters, Motorcycles and Mopeds grew by 25.06 percent, 2.50
percent and 4.51 percent respectively in April-March 2015 over April-March 2014.
Exports
In April-March 2015, overall automobile exports grew by 14.89 percent over the same period last
year. Passenger Vehicles, Commercial Vehicles, Three Wheelers and Two Wheelers grew by 4.42
percent, 11.33 percent, 15.44 percent and 17.93 percent respectively during April-March 2015 over
the same period last year.

SIAM MEMBERS

Overview
Gross Turnover
Installed Capcity
Industry Composition
Production Trends
Domestics Sales Trends
Export Trends

Gross Turnover of the Automobile Manufacturers in India (In USD


Million)
2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

36,612

33,250

43,296

58,583

66,264

67,607

40

46

47

46

47

50

(USD Conversion Rate)

o Installed Capacity (In Million)


o (2011-12)
o

A. Four Wheelers

B. Two & Three Wheelers

C. Engines

5.81
18.95
1.00

o Installed Capacity (In Million)


o (2012-13)
o

A. Four Wheelers

B. Two & Three Wheelers

C. Engines (In Millions)

6.59
20.74
1.10

Domestic Market Share for 2015-16


Passenger Vehicles

14

Commercial Vehicles

Three Wheelers

Two Wheelers
Grand Total

80
100

Automobile Production Trends


Category

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Passenger
Vehicles

29,82,772

31,46,069

32,31,058

30,87,973

32,21,419

34,13,859

Commercial
Vehicles

7,60,735

9,29,136

8,32,649

6,99,035

6,98,298

7,82,814

Three Wheelers

7,99,553

8,79,289

8,39,748

8,30,108

9,49,019

9,33,950

Two Wheelers

1,33,49,34
9

1,54,27,53
2

1,57,44,15
6

1,68,83,04
9

1,84,89,31
1

1,88,29,78
6

Grand Total

1,78,92,40
9

2,03,82,02
6

2,06,47,61
1

2,15,00,16
5

2,33,58,04
7

2,39,60,40
9

Automobile Domestic Sales Trends


Category

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Passenger
Vehicles

25,01,542

26,29,839

26,65,015

25,03,509

26,01,236

27,89,678

Commercial
Vehicles

6,84,905

8,09,499

7,93,211

6,32,851

6,14,948

6,85,704

Three Wheelers

5,26,024

5,13,281

5,38,290

4,80,085

5,32,626

5,38,092

Two Wheelers

1,17,68,91
0

1,34,09,15
0

1,37,97,185

1,48,06,778

1,59,75,56
1

1,64,55,91
1

Grand Total

1,54,81,381

1,73,61,769

1,77,93,701

1,84,23,223

1,97,24,37
1

2,04,69,38
5

Automobile Exports Trends


Category

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

Passenger Vehicles

4,44,326

5,08,783

5,59,414

5,96,142

6,21,341

6,53,889

Commercial Vehicles

74,043

92,258

80,027

77,050

86,939

1,01,689

Three Wheelers

2,69,968

3,61,753

3,03,088

3,53,392

4,07,600

4,04,441

Two Wheelers

15,31,619

19,75,111

19,56,378

20,84,000

24,57,466

24,81,193

Grand Total

23,19,956

29,37,905

28,98,907

31,10,584

35,73,346

36,41,212

Vehicle Category

Excise Duty

Small cars

12.5%

Length >4m but engine capacity less than 1500cc

24%

Length >4m and engine capacity more than 1500cc

27%

SUVs/MUVs (length >4m, engine capacity >1500cc and Ground clearance >170mm)

30%

Hybrid cars

12.5%

Specified components of Hybrid vehicles

6%

Electric cars, Buses, 2W & 3W

6%

Specified components of Electric vehicles

6%

Buses

12.5%

Trucks

12.5%

Three wheelers

12.5%

Two wheelers

12.5%

Criteria / Applicability

Import Duty in
%

Used car import

125

Cars CBUs whose CIF value is more than $ 40,000


or Petrol Engine > 3000 CC
or Diesel engine > 2500 CC

100

Cars CBUs whose CIF value is less than $ 40,000


and Petrol Engine < 3000 CC
and Diesel engine < 2500 CC

60

Two-wheeler CBUs with engine capacity <800 cc

60

Two-wheeler CBUs with engine capacity >=800 cc

75

Commercial Vehicle CBUs (Trucks & Buses)

20

CKD containing engine or gearbox or transmission mechanism in pre-assembled


form but not mounted on a chassis or a body assembly

30

CKD containing engine, gearbox and transmission mechanism not in a preassembled condition

10

SIAM SUGGESTIONS ON GOODS & SERVICES TAX (GST)

The auto industry looks forward to introduction of GST. However, based on whatever inputs we got, there
are several concerns of the industry which have been mentioned below:

Taxes to be covered/ subsumed

All kind of domestic indirect taxes should be subsumed in the proposed GST, as suggested by Kelkar
Committee. This should include Road Tax/Motor Vehicle Tax also.

After introduction of GST, no additional tax should be introduced/ levied. A provision be made in the law
that no new levy or tax be introduced.
Any change, if required, in future (for specific needs like calamity, education, infrastructure, etc.) should
be done through modifying the rate of taxation under the GST regime and not through any additional
levy/tax/cess, etc.

Bring in used vehicle trade under GST framework with a token levy to make used vehicle trade more
organized.
1% GST rate will provide substantial annual revenue to the exchequer.

Tax Rates
The tax rate on inputs and output should be fixed considering the pattern of input purchase and output
sales which varies considerably. This has implications for the input tax credit. While vehicle manufacturing
takes place in a few states with supply to other states (local sales account for less than 10% of total
domestic sales), majority of components (around 70% - 80%) are procured from vendors within the state.
If tax rate of components/inputs is more than the tax rate at the time of supply of complete vehicles
(Completely Built Units), then refund would arise. Hence, to avoid that, it is suggested that
Uniform rate of tax should be charged on complete vehicles (whether by way of sale or by way of transfer)
and inputs, against which input credit should be allowed.

Tax paid on complete vehicles on movement from factory should be made available as input credit to the
vehicle dealers.
Manufacturers could give state-wise break-up at periodically to respective state governments who may
settle it through appropriate clearing house mechanism.

Considering the current level of taxation, a suitable tax rate may be adopted. Tax rates should be uniform
across states and there should be one authority to which payment would be made by way of one challan.

Tax Base & Levy


Goods and services should be classified on the basis of HSN and GATTS (at both central and state level).
A common base should be adopted for taxation of both Central and State GST. Under the present
taxation system, interstate sales tax and local sales tax is levied on excise duty in respect of the
manufactured goods resulting in cascading of taxes.

In case of non-sale, where transaction value of goods or services is not determinable and when GST is
charged, a simple mechanism of valuation could be adopted on the basis of cost.

Under GST, it is suggested that the basis of tax credit should be on Cost to Business, i.e. any tax which
is paid and forms cost to business should be allowed as tax credit, both at the Central & State level.

The document based credit should also be dispensed with and could be substituted by appropriate
certification by independent Chartered Accountant (or the Appointed Company Auditors). The same could
be subject to appropriate audits by trained government officers and could be IT enabled.

Diesel and motor spirit should be brought under GST with input tax credit and mechanism to avail the
same. VAT on diesel and motor spirit constitutes a significant element of cost for the transport industry. It
is suggested that total chain of input credit should remain unbroken and hence, all inputs should be
treated equally for the purpose of allowing input credit.

Others
In the proposed GST system, it is not known whether stock transfer would remain exempted from tax (at
present, sales tax is not levied on Stock Transfer) or would be made taxable in the importing state; the
industry needs to understand the treatment of stock transfers for the purpose of input tax credit.
There should be no distinction between input and capital goods. Presently, definition of Capital Goods
under Central excise law and state VAT is not uniform. Under State VAT, definition of capital goods and
also the rate of taxation vary from state to state. As regards periodicity of taking credit, excise and VAT
laws differ.

In respect of existing exemptions having sunset clause, appropriate transitional provisions should be
introduced to ensure continuity of existing benefits. A clarification is needed on how the existing sales tax
benefit schemes e.g. loan, deferral would be affected.

The State Goods and Services Tax Act, State GST Act should be a common Act operated/implemented by
all the states and Union Territories (similar to present Central Sales Tax Act) covering transactions related
to goods, services and exports.

Concept of Tax Invoice should be continued for availing State GST credit.
To ensure viability of EOU under severe competition, timely refund of tax is needed. Effective refund
system should be in place for smooth operations of EOUs. Presently, EOUs are eligible to get refund of
CST on interstate purchase of inputs used in the production of export goods and local VAT content of the
export product is allowed to be deducted against the DTA Sales and the balance, if any, is allowed as
refund.

Under a dual GST structure (a Central GST and a State GST), there could be a situation where the Input
Tax credits which remain unutilized would be refunded to the assesses. Since the cross utilization of
credits between the Central GST and State GST are not permitted, there could be a situation of payment
on the one hand and a refund situation on the other. In order to avoid this situation cross utilisation of
input tax credits should be allowed.

Procedural changes should be notified in advance. The industry should be given 6 months lead time
before introduction of GST.

State specific incentives should be protected under GST.

SIAM MEMBERS

o
o
o

Auto Policy
Taxes
Budget
Pre Budget Memorandum
Union Budget
Post Budget Memorandum
Trade Policies
PREAMBLE
Auto industry is said to be the engine of growth in most developed countries, including in
China and India today. Indian automobile industry which was at its nascent stage at the
beginning of the 21st century has now become a huge industry that contributes majorly to
growth and development of Indian Economy. As per the current statistics, the auto industrys
turnover is estimated to be equivalent to:

7.1% of overall GDP

About 26% of Industry GDP

About 49% of manufacturing GDP

The industry employs 29 million people, directly and indirectly, and contributes to 13% of excise
revenue for the Government.
The Automotive Mission Plan 2006-16, a joint document of the Government and industry has
projected that the industrys turnover would increase from US$ 34 billion to US$ 145 billion, an
investment of US$ 35-40 billion (Rs.160,000 -180,000 crores) and 25 million additional job would be
created over a period of 10 years. The auto industrys contribution to GDP would rise from nearly 5%
to 10%, thus making it a greater driving force of the economy.
As envisaged, the industry has made major investments to achieve the targets set. The industry has
made investments to the tune of Rs 50,000 crores in the last three financial years. However at the
current level of growth, the industry is expected to be just over US$110 billion, a shortfall of about
25%.

The industry was growing at the right pace until financial year 2012 to achieve the targets set in AMP
2016. However, the industry witnessed two difficult years, FY13 and FY14, in which the segments
across the industry witnessed de-growth, carrying nearly 60% surplus production capacity.
The current change in policy environment and consumer sentiments have brought the industry out
from the bottoms seen during the last two financial years. The Government recognized the fact that
automobile industry was one of the highest taxed industry in India and the high taxes were acting as
a deterrent for growth of the industry. Hence, in the Interim Budget 2014-15 excise duties on all
products across various segments within automobile industry were reduced.

The changes to the excise duties were as below:


Excise duty on small cars, commercial vehicles, two wheelers and three wheelers was
reduced from 12% to 8%

Excise duty on (other passenger vehicles) of engine capacity not exceeding 1500 cc was
reduced from 24% to 20%

Excise duty on (other passenger vehicles) of engine capacity exceeding 1500 cc was
reduced from 27% to 24%

Excise duty on SUVs/UVs of engine capacity exceeding 1500 cc was reduced from 30% to
24%
This reduced duty structure regime was further extended until December 2014 in June 2014, before
the General Budget 2014-15 was announced in July 2014. Even after the reduced duties on
automobiles, the industry is highly taxed. For every Rs 100 that the four-wheeler auto industry (other
than small cars) collects from the consumer, the Government collects approximately Rs 81 from the
consumer in the form of various taxes such as excise duty, sales tax, road tax and service tax. While
for every Rs 100 that the four-wheeler auto industry (small cars) collects from the consumer, the
Government collects approximately Rs 58 from the consumer in the form of various taxes. Taxes are
levied on fuels as well.
The auto industry currently employs more than 29 million people both directly and indirectly. The
auto-industry is a key employment generator in the OEM factory that manufactures the vehicles, in
the inbound auto component and logistics industry that makes and delivers components & systems
and the outbound logistics and dealer network that sells, maintains and distributes the cars. Every
vehicle produced, generates secondary and tertiary employment. The industry generates
employment of 13 persons for each truck, 6 persons for each car and four persons for each three
wheeler and one person for two-wheelers. It is important to appreciate the sectors multiplier effect
on economic activity. If the industry produces as per its potential, it could generate employment of
over 35 million people by 2016.
If the Governments objective is to increase the share of manufacturing in the GDP of the economy
from an estimated 15 per cent to at least 25 per cent so that employment gets a definite boost, the
role of auto industry cannot be ignored and the industry has already made investments to achieve
this objective and have increased the capacity to levels that would be needed to achieve the
objective.

The industry requires the Government to support by providing it an atmosphere that facilitates
growth. While the auto industry is focused on generating volumes in the different segments to garner
growth, it is in the interest of the Government to continue with the lower excise rates as this will help
increase volumes and garner additional tax revenue. High tax rates and consequent high prices of
vehicles have a harmful effect of lowering volumes, lowering gross tax collections and ultimately
lowering growth in the auto sector.
The Government should facilitate a conducive environment for growth of auto industry by defining
favourable long-term policy for investment. Due to the unfavourable policy environment in the
country where tax rates on vehicles are getting changed every year and Government is negotiating
FTAs where custom duties are likely to come down, many international companies that had plans to
enter the market have stalled the plan and are now considering other emerging markets, such as
China and Brazil.
The automobile industry in India is one of the most successful story of post liberalization
manufacturing space in I

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