Corporate Tax Cut Set To Have Positive Impact On India’s Auto Sector, ICRA Says
The reduction of corporate tax rates to globally competitive levels will incentivise original equipment manufacturers and their vendors to increase localisation, which augurs well for the auto industry, ICRA said in a statement.
Indian auto firms have imported components worth $17.6 billion in 2019-20 so far, and the figure is likely to increase further in 2020-21, given the shift to stricter safety and emission norms from Apr. 1, 2020.
"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 goods and services tax/cess revision will help consumers who were waiting for improved clarity prior to their car purchase decision, he added.