BRIGHTER PROSPECTS

Auto components India - - EDITORIAL -

By the time you read this col­umn, the Gov­ern­ment of In­dia would have rolled out the Goods and Ser­vice Tax (GST). GST is set to be rolled out on July 1, 2017. It is go­ing to be a red let­ter day in the eco­nomic his­tory of In­dia. Au­to­mo­tive in­dus­try is among its ma­jor ben­e­fi­cia­ries. From a com­bined VAT and ex­cise duty of 44% the base GST is set at 28%. Even af­ter the ad­di­tion of cess and ser­vice charges, the tax bur­den will be lighter than the cur­rent one. The na­tion-wide uni­form regime will en­able the au­to­mo­tive sec­tor to claim in­put tax credit on var­i­ous el­e­ments of the cost struc­ture such as ser­vice tax paid on lease rentals, IT ser­vices, freight charges on fin­ished prod­ucts and other out­sourc­ing ac­tiv­i­ties.

GST will ease the bot­tle­necks and com­plex­i­ties re­lated to in­ter-state road trans­porta­tion of goods. Fur­ther CST will be sub­sumed in GST. The com­pa­nies can stream­line ware­hous­ing in­fra­struc­ture and ben­e­fit from lower sup­ply chain and man­u­fac­tur­ing costs. Un­der GST, taxes would be charged on the con­sum­ing state and on the State of ori­gin. This also would be a boost to the au­to­mo­tive in­dus­try. GST alone is not go­ing to push the growth of the in­dus­try since the prices of the other com­modi­ties are ex­pected to go up. This will force the buy­ers to think on where to spend. So we have to wait and watch the way GST would drive the au­to­mo­tive in­dus­try.

The fo­cus of the cur­rent is­sue is on au­to­mo­tive light­ing, which is in­no­vat­ing it­self and paving the way for in­no­va­tions in ar­eas like de­sign and light-weight­ing. In front light­ing, the mar­ket is di­vided into halo­gen light, which still has a big mar­ket share, high-in­ten­sity-dis­charge (HID) Xenon light­ing, and, more re­cently, LED lights. In Europe, day­time-run­ning lights (DRLs) are now manda­tory and these are go­ing to be full LEDs. This new con­cept is spread­ing fast in the In­dian mar­ket as well.

LED light assem­blies are smaller than Xenon or halo­gen and they last longer, of­ten longer than the lives of the cars them­selves. There­fore the lamp man­u­fac­tur­ers are work­ing on some new in­no­va­tions in the LED space to suit the In­dian mar­ket.

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