Global auto majors, including General Motors and Honda, on Friday said the government should remove “obstacles” and make policies more business friendly if India has to successfully achieve Prime Minister Narendra Modi’s ‘Make In India’ goal.
They highlighted issues, ranging from difficulty in getting business permits to taxation, infrastructure and logistics, which they said are acting as “obstacles” in the growth of the auto industry in India.
“There are a considerable number of obstacles to doing business in this country. It is hoped that such obstacles will be cleared away under the new leadership of Prime Minister Modi,” Japan Automobile Manufacturers Association (JAMA) Chairman Fumihiko Ike said while addressing the annual convention of SIAM.
Mr. Ike, who is also the chairman of Honda Motor Co., further said: “Many Japanese auto parts suppliers are anxious to establish operations in this country. However, those suppliers as well as auto manufacturers often encounter problems in obtaining business permits and completing paperwork required for acquisition of the business property. The complicated process of obtaining a plant construction permit, in some cases, has seriously hindered business plans. These problems are further compounded by India’s complex domestic taxation system which varies from one state to other. These taxes, which are far more burdensome than international taxations standards, are also impending investments in India,” he added.
Asking for speedy measures to address such issues, Mr. Ike said: “JAMA therefore would like to see the earliest possible introduction of single, uniform national GST and our industry continues to call for improvements in the permanent establishment tax and other surcharge taxes. The investment environment in India for Japanese companies should greatly improve once these complicated taxation problems are resolved.”
Sharing similar sentiments, Nissan Motor Co. senior vice president and chairman for Africa, Middle East and India Takashi Hata said: “Simplify the vendor duty drawback scheme. This (India) is not the easiest country to get this.”
Expressing similar views, General Motors executive vice-president Stefan Jacoby said: “To realise the full potential of the industry, we encourage the government to reform overall central and state taxation policies in a timely manner.”
Mr. Jacoby, who along with GM CEO Mary Barra met Mr. Modi on Thursday, said the PM and his team “are creating an environment that is friendly to business and investment” but added, “policies that are both rational and transparent — such as a GST — will go a long way towards encouraging companies to invest locally for the long term.”
“We would like to see taxation standards that are common across federal states. We need to make vehicles more affordable,” Mr. Jacoby said.
Calling for a long-term perspective from the government, Mr. Jacoby said: “The current product life cycle is approximately 10 years. The auto industry requires stable industry policy and regulations to optimise our investment. We need a clear road map from the government for regulations with respect to safety, emissions and CO2.”
Drawing attention to labour reforms, Mr. Jacoby said: “We would also like the government to address the need for flexible labour reforms, especially in manufacturing. This is one of the areas in which India lags behind other industrialised economies.”
Mr. Jacoby further said: “We strongly encourage the Indian government to explore additional trade opportunities by bringing down tariffs and eliminating non-tariff barriers and support exports of vehicles and components.”
