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.