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Uniform excise duty, tech upgrade urgently needed: Auto parts industry

punjab Updated: Jul 02, 2014 14:54 IST
Arjun Sharma
Arjun Sharma
Hindustan Times

With the union budget scheduled for July 10, different industries in Ludhiana have emphasised on their wishes. The industry leaders have come out with their expectations from the budget that would also highlight the policies of the newly-formed National Democratic Alliance (NDA) at the Centre.

Starting from the city’s auto parts industry that is one of the major contributors to the economy of the state, the series, including knitwear and garment, cycle, and real estate, would conclude with the expectations of general masses, which are an integral part of the society.

Leaders of the industry believe that the major reason why auto parts industry in Ludhiana was facing a downward movement was due to the lack of upgrading in technology. The industry in Ludhiana provides equipment to some of the major automobile companies in the country.

Mercedes Benz, Audi, Maruti, Tata, and Nissan among several others are some of the leading customers of the industry, but the equipment remains limited to only metal parts due to the lack of technology. During the interim budget before elections, UPA government had brought down the excise duty on small cars, scooters, motorcycles and commercial vehicles from 12% to 8%. Whereas the duty for SUVs was brought down from 30% to 24%, and for midsize cars, it was reduced from 24% to 20% that had given some relief to the industry.

Upkar Singh Ahuja, chairman of the Automotive Component Manufacturers’ Association of India, said, “Excise duty should be made uniform for automobiles for at least three years, so that stability could be brought even in the auto parts through planning.”

“Technology upgrading is the need of the hour for auto parts industry. For this, a research and development (R&D) centre should be started at Ludhiana by the central government, so that new technology could be introduced in the industry,” Ahuja said.

Industry had also demanded subsidy and other schemes for upgrading of the existing infrastructure.

“A skill development centre is also required for betterment of the industry,” Ahuja said.

The industry has been riding in a low gear due to the directions of the automobile companies that a unit of parts should be located within a radius of 100 km of the plant to reduce the cost of carrier. Industrialists also relate the slowdown in the industry to global slowdown that has severely hit their business and many of them have also shifted their units to Gurgaon, Pune and elsewhere where automobile companies were setting up their plants.

Ranjodh Singh, general secretary of the Auto Parts Manufacturers’ Association, said the industry was facing the heat, and the sale of automobile had also gone down that had directly impacted the industry.

“Sincere steps are required by the central government, so that auto parts industry could improve. Government should come up with a scrap policy that should be implemented strictly. This will ensure dumping of old vehicles and new vehicles will ply on roads,” Singh said.

Exporters of auto parts have also raised the issue of value of dollar and have said it should be brought down.

Rahul Ahuja, managing director of Rajnish Industries, said the government should try to bring down the value of dollar that would bring cheaper imports to the country. “With this, the government should also increase the incentives given to the exporters so that uniformity could be brought,” Ahuja said.


As per the data of the Society of Indian Automobile Manufacturers (SIAM), sale of passenger vehicles declined by 6.05% during financial year 201314. Decline of 20.23% was seen in commercial vehicles during the same period. Production of three-wheelers also witnessed a decline of 10.9% during this period. As per the data, two-wheeler sale registered a growth of 7.31% during the financial year 2013-14.