|
Customs duty on steel melting and aluminium melting scrap reduced from 5% to 0%.
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Reduction in excise duties in select segments of automobiles.
| |
World-class skill development programme to be launched.
| |
Dividend tax paid by parent company allowed to be set off against the same paid by its subsidiary.
|
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Customs duty exemption on select metal scrap might reduce the raw material cost for some of the auto component players.
| |
Excise duty reduction in select auto segments will help spur demand for automobiles, which in turn will benefit the components industry.
| |
Skill development programme will help address skilled labor shortage problem in the future.
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Customs duty exemption on raw materials such as steel and aluminium scrap is a positive for certain forgings and castings players like Bharat Forge and Amtek Auto.
| |
Excise duty reduction on automobiles as well as the proposed world class skill development programme will help all the players in the industry.
|
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The government should create a level playing field in terms of input costs and taxes thereof especially in light of the proposed FTAs with ASEAN and other countries like China
| |
Tax incentives should be provided for setting up new industrial parks dedicated to auto and auto components so that India could be made a global manufacturing hub in the long run
| |
The government should do away with the complexities of the current labour laws and make them much simpler so that the industry becomes more competitive.
|
| Budget 2005-06 |
|
Budget 2006-07 |
|
Budget 2007-08 |
|
|
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|
|
Customs duty on lead cut to 5%.
Excise duty on tyres, tubes and flaps reduced from 24% to 16%
No change in excise duty on automobiles.
Customs duty reduction on select capital goods and inverted duty structures (i.e., the duty on input costs being higher than the product itself) reduced from 15% to 5% or 10%. Customs duty on the basic plastic material reduced to 10%. Customs duty on selected petro-chemicals reduced from 10% to 5%.
Customs duty on natural rubber maintained at 70%. But peak customs duty reduced from 20% to 15%.
VAT implemented in majority of the states.
|
|
Peak custom duty reduced from 15% to 12.5%
Excise duty on cars having engine capacity upto 1,200 cc (petrol based engines) and 1,500 cc (diesel based engines) and length of the car upto 4,000 mm reduced from 24% to 16%.
Continued thrust on road infrastructure
Custom duty on alloy steel and non-ferrous (primary and secondary) metals reduced from 10% to 7.5%
|
|
A secondary and higher education cess @ 1% of the aggregate of duties of excise has been imposed on excisable goods including auto ancillaries. This would be in addition to existing education cess of 2% imposed in budget 2004
Hike in the dividend distribution tax from the current 12.5% to 15%
Vocational training programmes based on public-private partnerships to be initiated
|
| [Read more on Budget 2005-06] |
|
[Read more on Budget 2006-07] |
|
[Read more on Budget 2007-08] |
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| Key Positives |
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Auto industry potential: Since the auto component industry tracks the auto industry, the bright future of the latter augurs well for the former. As per the automotive mission plan 2016; the auto industry plans to achieve a domestic turnover of US$ 145 bn by 2016 and employ more than 25 m people. Hence, it is only natural to expect the auto ancillary industry to grow at a similar rate if not more. |
|
The export story: With the Indian auto ancillary industry graduating to world class standards, it has caught the attention of a lot of global auto majors, all of whom are keen to outsource some of their work to India. Already, exports have logged in a growth of more than 30% in the past five years and are expected to grow at more than 20% atleast for the next 10 years. What is also noteworthy is the fact that exports to OEMs and Tier 1 suppliers now constitute more than 75% of total exports as against a mere 35% in the early nineties. |
|
Technical proficiency: The entry of global players from different continents has led to the Indian manufacturer’s proficiency with all global automotive standards such as American, Japanese, Korean and European. It has also helped the global players to see for themselves the evolution of many auto components manufacturers and they are therefore now entrusting them with more work. |
|
Quality consciousness: While the Indian manufacturing industry is not exactly known for its cutting edge technology and stringent quality standards, things are beginning to change. The fact that as many as nine companies boast of the coveted Deming awards is a testimony of the fact that the Indian auto ancillary industry is capable of manufacturing products that are at par with the best in the world in terms of quality. Not only this, about 81 companies in India have QS 9000 certification, considered to be an important pre-requisite for supplying to the US based OEM’s. |
| |
| Key Negatives |
|
|
Rising costs: Prices of key inputs like steel and aluminium have remained firm over the last few years and this is hurting the profitability of the auto ancillary players. Further, with the auto companies themselves engaging in fierce competition, there is pressure on auto component players to further reduce prices and improve productivity. Thus, this squeeze from both the ends may not allow the smaller companies to invest suitably for future growth. |
|
Competition from other Asian countries: While the Indian IT industry got a headstart over its rivals, the same cannot be said about the auto components industry as countries like China and Thailand might put a spanner in domestic industry's wheels. While China has huge economies of scale and lower labour cost than India in some areas, Thailand is believed to have excess capacity (legacy of East Asian crisis) and depreciated assets. Therefore, these countries are capable of beating India at its own game, that of low cost. |
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|
| Sector Performance |
|
| COMPANY |
PRICE (Rs) |
|
| AFFORDABLE ROBOTIC & AUTOMATION |
540.0
(-1.9%) |
|
| AKAR TOOLS L |
113.2
(0.2%) |
|
| AMARA RAJA ENERGY & MOBILITY |
1,110.3
(-2.0%) |
|
| AMIC FORGING LTD. |
665.0
(-0.7%) |
|
| ASAHI INDIA |
600.5
(-0.4%) |
|
| ASK AUTOMOTIVE LTD. |
318.0
(0.6%) |
|
| AUTO CORP. OF GOA |
2,010.0
(-3.3%) |
|
| AUTOLINE INDUST. |
127.2
(-0.8%) |
|
| AUTOMOTIVE AXLES |
1,880.6
(0.6%) |
|
| AUTOMOTIVE STAMP |
828.9
(1.5%) |
|
| BANCO PRODUCTS |
629.0
(1.4%) |
|
| BHARAT GEARS |
119.9
(-0.5%) |
|
| BHARAT SEATS |
155.1
(1.0%) |
|
| BIMETAL BEARINGS |
636.0
(-0.1%) |
|
| BOMBAY CYCLE |
1,498.8
(-1.8%) |
|
| BOSCH |
28,775.5
(-0.3%) |
|
| CIE AUTOMOTIVE INDIA |
490.8
(0.8%) |
|
| CRAFTSMAN AUTOMATION |
4,675.0
(1.6%) |
|
| DECCAN BEARINGS |
58.9
(-1.3%) |
|
| DIVGI TORQTRANSFER |
837.9
(0.4%) |
|
| DOLFIN RUBBERS |
207.4
(2.9%) |
|
| EL FORGE. |
19.6
(5.0%) |
|
| ENDURANCE TECHNOLOGIES |
1,921.8
(-0.5%) |
|
| EXIDE INDUSTRIES |
435.2
(-2.1%) |
|
| FEDERAL - MOGUL G |
375.7
(-3.0%) |
|
| FIEM INDUSTRIES |
1,200.0
(2.5%) |
|
| GABRIEL INDIA |
352.5
(0.3%) |
|
| GKW. |
2,440.0
(-2.1%) |
|
| GNA AXLES |
414.4
(-0.0%) |
|
| GS AUTO INT. |
40.5
(-0.6%) |
|
| HAPPY FORGINGS LTD. |
943.6
(-1.5%) |
|
| HI-TECH GEARS |
1,115.0
(0.8%) |
|
| HIGH ENERGY |
935.0
(3.1%) |
|
| HIM TEKNOFORGE |
140.7
(0.4%) |
|
| HIND HARDY SPICE |
493.0
(-0.1%) |
|
| HIND.COMPOSI |
427.0
(1.6%) |
|
| INDIA NIPPON |
718.2
(0.4%) |
|
| INDO NATIONAL |
732.0
(9.8%) |
|
| IP RINGS |
181.9
(0.9%) |
|
| IST |
970.2
(-0.1%) |
|
| JAINEX AAMCOL |
135.2
(-8.0%) |
|
| JAMNA AUTO |
135.0
(0.3%) |
|
| JAY BHARAT MARUTI |
116.8
(0.1%) |
|
| JBM AUTO. |
1,817.0
(-0.3%) |
|
| JTEKT INDIA |
179.5
(-0.6%) |
|
| KRANTI INDUSTRIES |
75.6
(2.1%) |
|
| L.G.BALAKRISHNAN |
1,309.5
(-0.0%) |
|
| LUMAX AUTO TECHNO |
493.9
(0.2%) |
|
| LUMAX IND |
2,542.8
(1.4%) |
|
| MAH. SCOOTERS |
8,110.0
(0.0%) |
|
| MAKS ENERGY SOLUTIONS |
61.5
(-0.8%) |
|
| MENON BEARINGS |
129.9
(-0.5%) |
|
| MENON PISTON |
93.0
(-0.4%) |
|
| MINDA CORPORATION |
410.3
(-1.0%) |
|
| MOTHERSON SUMI WIRING |
70.6
(-0.5%) |
|
| MUNJAL SHOWA |
165.0
(0.4%) |
|
| NDR AUTO COMPONENTS |
845.0
(-0.5%) |
|
| NEW SWAN MULTITECH LTD. |
74.3
(0.4%) |
|
| NRB BEARINGS |
319.6
(-1.2%) |
|
| NRB INDUSTRIAL |
37.1
(5.2%) |
|
| OMAX AUTOS |
119.9
(2.0%) |
|
| PAE |
4.8
(-1.8%) |
|
| PANKAJ PIYUSH |
104.1
(4.9%) |
|
| PATTECH FITWELL TUBE COMPONENTS LTD. |
91.0
(4.0%) |
|
| PORWAL AUTO |
59.4
(4.3%) |
|
| PPAP AUTOMOTIVE |
210.0
(0.5%) |
|
| PRECISION CAMSHAFTS |
215.3
(1.3%) |
|
| PRECISION METALIKS |
51.3
(2.3%) |
|
| PRICOL |
434.0
(1.3%) |
|
| PRITIKA ENGINEERING COMPONENTS LTD. |
64.1
(-2.8%) |
|
| RACL GEARTECH |
1,310.7
(0.3%) |
|
| RAJKUMAR FORGE |
102.0
(-0.4%) |
|
| RAMKRISHNA FORG |
772.5
(0.5%) |
|
| RANE BRAKE |
832.7
(0.4%) |
|
| RANE ENGINES |
364.6
(-0.3%) |
|
| RANE MADRAS |
846.4
(0.6%) |
|
| RASANDIK ENG. |
95.0
(1.3%) |
|
| REMSONS IND. |
962.9
(1.2%) |
|
| RICO AUTO |
139.8
(0.4%) |
|
| ROLEX RINGS |
1,865.8
(-1.2%) |
|
| SAI MOH AUTO LINKS |
25.8
(5.0%) |
|
| SAL AUTOMOTIVE |
561.9
(2.2%) |
|
| SAMVARDHANA MOTHERSON |
126.8
(-0.0%) |
|
| SANDHAR TECHNOLOGIES |
519.4
(-0.2%) |
|
| SCHAEFFLER INDIA |
3,283.2
(-0.2%) |
|
| SCHRADER DUNCAN |
453.9
(1.1%) |
|
| SETCO AUTOMOTIVE |
12.2
(5.0%) |
|
| SHANTAI INDUSTRIES |
36.0
(-3.5%) |
|
| SHIGAN QUANTUM |
117.7
(0.0%) |
|
| SHIVAM AUTOTECH |
43.0
(0.9%) |
|
| SIBAR AUTO |
12.9
(1.4%) |
|
| SIMMONDS MARSHALL |
88.2
(-0.8%) |
|
| SINTERCOM INDIA |
130.0
(0.7%) |
|
| SJS ENTERPRISES |
616.8
(0.9%) |
|
| SKF INDIA |
4,642.0
(0.5%) |
|
| SKP BEARING INDUSTRIES |
239.5
(-0.1%) |
|
| SMITHS & FOUNDERS (INDIA) |
5.4
(1.1%) |
|
| SNL BEARINGS |
395.0
(0.1%) |
|
| SONA COMSTAR |
662.3
(-0.7%) |
|
| STEEL STRIPS WHEELS |
227.5
(0.5%) |
|
| STERLING TOOLS |
359.2
(0.6%) |
|
| SUBROS. |
628.9
(3.6%) |
|
| SUNDARAM BRAKE |
719.0
(0.5%) |
|
| SUNDRAM FASTENERS |
1,060.7
(1.0%) |
|
| SUPRAJIT ENGINEERING |
418.5
(-0.5%) |
|
| TALBROS AUTO |
298.4
(-0.5%) |
|
| TAPARIA TOOL |
3.7
(4.8%) |
|
| TIMKEN INDIA |
3,175.0
(0.2%) |
|
| TIRUPATI FORGE |
18.5
(-0.3%) |
|
| TIRUPATI TYRES |
68.7
(-0.0%) |
|
| TRITON VALVE |
2,930.0
(1.6%) |
|
| TVS HOLDINGS |
8,582.4
(2.4%) |
|
| UCAL FUEL |
184.0
(1.0%) |
|
| UNIVERSAL AUTOFOUNDRY |
176.8
(0.4%) |
|
| URAVI WEDGE LAMPS |
411.2
(2.8%) |
|
| WHEELS INDIA |
581.2
(-3.0%) |
|
| ZF COMMERCIAL |
14,142.4
(1.7%) |
|
| ZF STEERING |
1,113.0
(2.3%) |
|
|
|
