Auto sector will benefit from corporate tax cut: ICRA

The Indian automotive industry, especially passenger vehicle segment, has witnessed one of the worst slides in the last two decades due to multiple fa
...
The Indian auto industry is facing the worst slump in nearly two decades.
The Indian auto industry is facing the worst slump in nearly two decades.

The automotive industry, which accounts for about half of the country's manufacturing GDP, is likely to be one of the key beneficiaries of corporate tax revision, rating agency Icra said on Monday.

The reduction of corporate tax rates to globally competitive levels will incentivise OEMs (original equipment manufacturers) and their vendors to increase localisation, which augurs well for the industry, Icra said in a statement.

Also check these Vehicles

Find more Cars
Mahindra Ekuv100 (HT Auto photo)
UPCOMING
BatteryCapacity Icon40 kWh Range Icon150 Km
₹ 8.25 - 10 Lakhs
View Details
Porsche 911 Gt3 (HT Auto photo)
Engine Icon3996.0 cc FuelType IconPetrol
₹ 2.50 Cr
Compare
View Offers
Mahindra S204 (HT Auto photo)
UPCOMING
₹ 12 Lakhs
View Details
Lexus Nx (HT Auto photo)
Engine Icon2494.0 cc FuelType IconMultiple
₹ 64.90 - 71.60 Lakhs
Compare
View Offers
Rolls-royce New Ghost (HT Auto photo)
UPCOMING
Engine Icon6750 cc FuelType IconPetrol
₹ 6.95 - 7.95 Cr
View Details
Mercedes-benz Amg E53 Cabriolet (HT Auto photo)
Engine Icon2999.0 cc FuelType IconPetrol
₹ 1.30 Cr
Compare

"Given the increasing US-China trade tensions, revision in corporate tax will attract FDI in Indian manufacturing sector, as the revised tax structure is now in line with other emerging markets," Icra said.

Indian auto manufacturers have imported components worth USD 17.6 billion during 2019-20 (till now) and this is likely to increase further in 2020-21 given the transitionary phase towards stricter safety and emission norms.

In the current fiscal, the Indian automotive industry, especially passenger vehicle segment, has witnessed one of the worst slides in the last two decades due to multiple factors like tighter financing environment for consumers and liquidity crunch faced by dealerships.

Besides, weak farm income and overall slowdown in economic activity has impacted consumer sentiments and purchasing behaviour.

"Under the current weak demand conditions, OEMs are expected to pass on some benefits of tax revision to the end consumers. This implies that the price correction in coming months will to an extent address the demand side issues," Icra Vice President and Sector Head Pavethra Ponniah said.

Moreover, clarity from the government that there is no further GST/cess revision will help consumers who were waiting for improved clarity prior to their car purchase decision, he added.

First Published Date: 23 Sep 2019, 17:38 PM IST
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.