Bring passenger cars under DEPB: Industry

Alarmed by the appreciation of the rupee and its impact on export competitiveness, automobile manufacturers have sought Government support to be made eligible for Duty Entitlement Pass Book (DEPB) benefits on passenger car exports and asked for modifications in export promotion schemes.

The auto component manufacturers, which are also bearing the brunt, have asked for tax breaks through reintroduction of 80 HHC code provision. Their association is seeking an enhancement of DEPB rates by 3-4 per cent as well.

In a recent meeting with the Directorate-General of Foreign Trade, the Society of Indian Automobile Manufacturers (SIAM) has asked that automobiles be included in export promotional schemes such as ‘focus product’ and ‘focus market’.

DEPB rate

“There is no DEPB rate on passenger cars as in the case of commercial vehicles and two-wheelers. So, we have asked the Government to make suitable amendment so that passenger vehicles are included in it,” said a senior SIAM official. “Indian automobile manufacturers are incurring huge costs on developing new export markets like Russia and South Africa that are not a part of the focus market scheme, for which also we have made a proposal to the Government,” the official added.

The focus market scheme provides around 2.5 per cent credit to the free-on-board value of exports of products in select countries, as against the focus product scheme that allows credit on export of certain products.

With supply contracts already on a long-term basis in the case of automobiles, it also rules out the possibility of renegotiating for exports, cited the official. When asked to comment, the SIAM Director General, Mr Dilip Chenoy said, “We have made a series of requests to improve the overall automobile exports. This is also in line with the Automotive Mission Plan target to boost export competitiveness.”
Low growth

Among all categories, including two-wheelers and commercial vehicles, the passenger vehicles market has witnessed the lowest pace of export growth with a marginal increase of 1.48 per cent in the first half of the current fiscal.

According to industry estimates, the margins on exports are already less and with the current rupee appreciation companies are incurring substantial losses. Hyundai, the largest exporter of passenger cars, is estimating a loss of Rs 169 crore this year.

While the going is already tough for the auto industry on the domestic front on account of high interest rates and a consequent slowdown in automobile sales, in the absence of any Government support, India would lose out on exports as well, says the industry body.