The proposed GST implementation may fuel growth in the $39 billion domestic auto ancillary industry following lower taxation of 18 per cent under the new regime, industry experts said.
With the upcoming GST regime, the auto ancillary industry will get a boost. The auto ancillary industry’s effective rate of tax, which is currently at 28 to 30 per cent, is expected to come down to 18 per cent upon implementation of GST, the experts said.
The industry is already reaping benefits of a favourable ecosystem in domestic market and increasing globalisation of Indian auto suppliers. The tax benefit will be passed on to OEMs (original equipment manufacturers) which will eventually drive expansion in auto demand, they said.
Many auto ancillary and auto component manufacturers usually set up their units closer to the OEM facilities just to avoid VAT credit chain.
The Economic Times, 3 March 2017
