AUTOMOBILE SECTOR IMPACT

GST Road map cleared to be rolled on 01st April 2016, this is going to impact
the supply chain structure of the major automobile distributions. Around 34% of cost benefit is going to accure to the suppliers and the automobile
manufacturers.
How ? : Till date the distribution centres at various states were planned
according to the tax structures and the tax credits that were available, with
GST and uniformity the suppliers and manufacturers may save on the Capex
done on distribution centres.

Electric car allotment of Rs.75 crores.

The sector anticipated some tax benefits and subsidies in these areas to
curtail the overall cost of productions of electric vehicles.
Higher deductions in the form of R&D expenditures were the expectations of
the
Industry.
Indian Electric car market has a low demand of around 100 vehicles a month ,
around 50-60% is under the Mahindra Reva . Subsidies could trigger increase
in demand of about 40-50% of Mahindra Reva.

MNREGA allotment increased by Rs.5000 Crores

The Industry for the last 2 years heavily banked on the rural demand
for the recovery of dump sales, 11 million out of 15 million of two
wheeler demand was from rural market amongst others. Lower farm
output, dwindling monsoon and moderate growth in the support prices
of food grains was a danger this fiscal for the rural market about which
witnessed steepest dip of 22% in tractor sales in the December
quarter.
Increased Allotment of Rs.5000 crores could help reviving this demand
and the idle cash in the rural economy could be channelized.
Increased allotments could also lead to increase in the wage of labour
market deployed in Agricultural Industry, this could trigger demand for
mechanisation of farms leading to good demand of Tractors.

EXCISE DUTY IMPLICATIONS

The completely builts imports of commercial vehicles excise duty has

been increased from 10 to 20 % . This could trigger more demands in
terms of imports for (CKD) completely knocked down commercial
vehicles .
The increase in excise duty on small cars by .14% with decrease in
excise duty on bigger cars along with the benefits of free trade zones

and increased input costs due to excise are all going to offset the
overall increase in costs because of taxes.
The excise duty and import duty on inputs like Butyl rubber were left
unchanged , which significantly affects the input cost for the
manufacturers. The percentage of excise duty on rubber and alloy
product is more than the final product .
The unchanged anti dumping duty on carbon black and the Butyl
rubber leaves the domestic auto players with high cost of tyres.