GST will hopefully end tax anomalies and promote auto sector growth
Mr. Sushil Kumar Modi, Deputy Chief Minister of Bihar, has assured the State automobile dealers that the issue of entry tax on motor vehicles, which does not bring in any significant revenue, will be addressed in the best possible manner to benefit both the Government and the auto retail trade.
His assurance came while delivering his address at the first-ever Convention of Automobile Dealers at Patna, organized jointly by the Federation of Automobile Dealers Associations (FADA) and the Automobile Dealers Association of Bihar (ADAB).
he convention was attended by over 200 automobile dealers from Bihar and other parts of India.
Speaking as the chief guest on the occasion, Mr. Modi observed: “The increasing vehicles sales indicate the State’s economy has improved, leading to cash flow in Bihar. Much of this credit goes to the NDA Government that came to power in the State in 2004-05. Ever since the NDA Government took over in Bihar, the State economy has grown at a healthy 11.50 per cent. It is certainly on a high growth trajectory. Per capita income has gone up in the last seven years, thus increasing the purchase power of the average residents. This is one of the factors pushing up vehicle sales in Bihar.”
He pointed out that the State Government is really concerned over the worsening road safety and environment following the tremendous growth in the number of motor vehicles in the State in the last one decade.
Attributing the increasing number of road accidents to lack of awareness of traffic rules and driver training, he exhorted automobile dealers to support the Government efforts towards promoting road safety and clean environment.
Mr. Vrishin Patel, Transport Minister of Bihar, said: “The State has registered a 500 per cent jump in sales of vehicles in the last 5-6 years.
Thanks to the strong performance of the economy under the current ruling dispensation, the total number of vehicles that stood at 80,363 in 2005-06 touched 4,40,000 in 2011-12.
This is clearly indicative of State’s growing economy under the NDA Government.”
In his address, Mr. Nand Kishore Yadav, State Road Construction Minister, attributed the growth in vehicle sales to the strengthening of the economy, the Government’s emphasis on building good roads and the improved law and order situation in the State. “The tremendous growth in vehicle sales ever since NDA came to power is also a tribute to the good roads laid out across the State. A total of 13,600 km of high quality roads has been built by the NDA Government in the past seven years, leading to significant reduction in travel time. Improvement in the law and order situation has changed the economic environment for the better.”
Mr. Dilip Chenoy, Managing Director & CEO, National Skill Development Corporation (NSDC), in his presentation, referred to the acute shortage of skilled manpower in the wake of economic growth in the country. Spelling out the aims and objectives of NSDC, he said that formation of the Automotive Skills Development Council (ASDC) was the first step in addressing the skill gaps in the automotive sector.
Earlier in his address, Mr. Nikunj Sanghi, FADA President, urged the State Government to remove entry tax on motor vehicles in the interest of simplification of the tax regime and uniformity in taxes across States.
Highlighting the importance of the auto sector in the national and State economies, Mr. Sanghi observed that the auto retail and service industry, having invested Rs. 35,000 crores, employing directly 7.5 lakh people countrywide and contributing significantly to the Central and State exchequers, played a very important role in national and State economies with its far-reaching forward and backward linkages. There are around 250 automobile dealers in Bihar who have invested close to Rs. 1,000 crores and provide direct employment to over 25,000 people. More than five lakh vehicles are sold by them every year. According to an ICRA report, a commercial vehicle generates 13.30 jobs. For every additional car, 5.3 employment opportunities are created and for every two-wheeler 0.5 jobs follow. Therefore, around 10 lakh people are directly and indirectly employed in the auto business and auto related activities in the State.
Stressing the role of auto retail to the State exchequer, Mr. Sanghi stated that VAT collections in Bihar on vehicle sales have gone up from Rs. 200 crores in 2005-06 to over Rs. 1,000 crores. Auto retail contributes around Rs. 1,750 crores by way of VAT and Transport Department’s revenue alone in the State. Besides, there is VAT on sales of parts and lubricants as well as fuel and service tax on repair and servicing of vehicles.
He expressed his hope that multiplicity of, and variation in taxes at the regional and local levels would be removed with the introduction of GST to pave way for faster growth of the automobile industry and the economy as a whole. Similarly, there are a host of other taxes on motor vehicles, which are not only pitched at a very high level but also vary from State to State. These taxes, including road tax, registration fee and permit fees, need to be rationalized and made uniform across the country. Incidentally, the incidence and the cascading effect of various taxes account for 40-50 per cent of prices of vehicles in India, he noted.
The FADA President assured the State Deputy Chief Minister and other distinguished guests present on the occasion that FADA and its constituent automobile dealers are willing to work with the State Government and other stakeholders to improve the environment, road safety and drivers as well as manpower training in the interest of the State economy and the auto market.
Earlier, welcoming the gathering, Mr. Umeshwar Prasad Singh, ADAB President, said that are a host of challenges facing the automobile retail trade and service industry. He hoped that that the presence of the Deputy Chief Minister, the Transport Minister and the Road Construction Minister as well as other senior officials of the State Government would help address some of the burning issues confronting the auto retail in Bihar.
Proposing a vote of thanks, Mr. Mohan Himatsingka, FADA Vice President, lauded the healthy growth of Bihar’s economy and the auto market. Thanks to the good governance, leading to improvement in the economy, law & order situation and business confidence, vehicle sales have witnessed a five-fold growth during the last seven years in Bihar.
Mr. Himatsingka expressed the hope that the high-calibre deliberations at the annual session would enable all stakeholders to put their heads together in addressing the issues and challenges facing auto retail in right earnest for the sustained growth of the auto market in the State.
“AutoLife”, a point initative of AutoFirst Life Insurance Co. and FADA to promote road safety in Bihar, was launched on the occasion.