Union Budget 2018: Reduction in corporate tax to 25 per cent for SMEs is a welcome step - ACMA
The Union Budget, presented yesterday by Arun Jaitley, the Finance Minister didn't seem to touch the automotive sector directly at all. But we you shall see soon, it did. The auto sector happens to be too large to be unaffected by changes elsewhere. To wit, the drop is corporate tax should make medium and small industries more profitable. Here is a reaction from Nirmal Minda, President - ACMA
Nirmal Minda, President - ACMA
The Budget unveiled by Hon'ble Finance Minister is indeed inclusive and pro-manufacturing. The component sector is delighted that the duty on select items such as engine & transmission parts, brakes and parts thereof, suspension and parts thereof, gear boxes and parts thereof, airbags etc. have been enhanced from 7.5/10% to 15%. These items account for more than 50% of USD 43.5 billion domestic component industry's turnover and over 30% of its USD 11 billion exports. The industry is extremely competitive in these areas and this measure will not only encourage investments but also encourage technology development in these areas."
Further, reduction in corporate tax to 25% for SMEs with turnover of up to Rs. 250 crore is yet another welcome step as over 80% of the companies engaged in the auto component manufacturing are SMEs. This measure, as also enhanced budgetary allocation of Rs 3,794 crore for credit support, capital and interest subsidy will have a benign impact on the smaller enterprises. That apart, simplification of procedure for credit availability through online-system for SMEs is a very welcome step.
The thrust given to the development of rural economy, infrastructure, particularly roads, augurs well towards creating a vibrant automotive market in the country, which in turn, will fuel growth and development of the domestic auto component industry.
Team OD | 12 Feb 2019
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