New Delhi (IANS) Subdued vehicle demand along with slowdown in key export markets, amongst others dented the year-on-year financial performance of the country’s auto component industry in FY 2019-20.
According to data, the turnover of the automotive component industry stood at Rs 3.49 lakh crore ($49.2 billion) for the period April 2019 to March 2020, registering a de-growth of 11.7 per cent over the previous year.
The data was furnished by the Automotive Component Manufacturers Association of India.
Besides, the ACMA Annual Industry Performance Review for 2019-20 showed that exports of auto components witnessed degrowth of 3.2 per cent to Rs 1.02 lakh crore ($14.5 billion) in 2019-20 from Rs 1.06 lakh crore ($15.2 billion) i n 2018-19.
“The automotive industry faced a prolonged slowdown in FY 2019-20 with vehicle sales in all segments plummeting significantly,” Deepak Jain, President, ACMA was quoted as saying in a statement.
“Subdued vehicle demand, investments made for transition from BSIV to BSVI, liquidity crunch, lack of a clarity on policy for electrification of vehicles and slow-down in key export markets, among others, had an adverse impact on the performance of the components sector in India as also on its expansion plans.”
However, Jain elaborated that with the unlocking of economy, growth seems to be returning to the industry with uptick in vehicle consumption especially in the two-wheelers, passenger vehicles and the tractor segments, although sales of commercial vehicles continue to be challenged.
“The component industry’s performance is expected to return to pre-Covid levels by the festive season should the ramp-up be not stymied by lockdowns in manufacturing zones and lack of availability of manpower,” he said.
As per the statement, ACMA continues to support the vehicle industry in their request to the government for enhancing vehicle demand in the country through reduction in GST on all vehicle categories to 18 per cent and introduction of an incentive based scrappage policy.
“For the components sector, ACMA continues to recommend a uniform 18 per cent GST rate across the auto component sector; currently 60 per cent of the auto components attract 18 per cent GST rate, while the rest 40 per cent, majority of which are two-wheelers and tractor components, attract 28 per cent,” the statement said.
“The latter high rate has led to flourishing grey operations in the aftermarket. A benign rate of 18 per cent will not only ensure better compliance but will also ensure a larger tax base.”