TOO MUCH TAX, HIGH-INTEREST RATES BIGGEST HURDLES FOR THE GROWTH OF THE AUTO INDUSTRY: FORCE MOTORS
Updated: Sep 14, 2020
According to Force Motors, New Delhi: Excessive tax and high-interest rates are the two biggest impediments in the country's growth and profitability.
Force Motors is the Pune-based company, making commercial vehicles under the Traveller brand and utility car Trax. Besides a range of tractors, the circumstance calls for a very detailed and absolute change. The Indian automotive industry, becoming grown and developed, remains burdened with two significant handicaps that are severe constraints to the market's growth and encourage investments and ensure its profitability, the automaker said in its Annual Report for 2019-20.
Force Motor said that the first unfortunate factor is the very high-interest cost compared to the global industry, which makes investments very burdensome, significantly when the technology scenario is rapidly changing. Compared to developed countries, the variation in interest rates is in the range of 6-8 percent, which grossly impacts the industry's competitiveness.
Force Motor added that the next adverse factor is very high GST level and very high road taxes exacted on automobiles in the country, with 50 percent in specific divisions. Have to pay interest, tax, depreciation from the RS 1 million it earns on each crore. The government collects taxes on the same vehicle sold by the industry at Rs 10 lakh to the aggregate value of taxes at nearly Rs 5 lakh, between central and state governments, up to 50 percent of the ex-factory value is collected in taxes, Force Motors said.
This condition calls for an exact and thorough betterment. These betterment needs to be both economic and regulatory reforms. As we advance in the post-COVID-19 era when the auto industry is heaving for breath, on account of the massive compression in the first half of the current year and the impacts of which will be felt for some years, such significant reform is essential, it added.
Read More at- Economics Times