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India's tax policy on automobiles has been quite consistent for the past three decades and the industry should strive for greater efficiency levels to bring down costs rather than expect tax cuts, government sources said on Thursday.
"These companies should cut down cost of manufacturing by reducing royalty payments to their parent companies abroad instead of asking the government to reduce Goods and Services Tax (GST), said a senior official of the Finance Ministry.
Government policies have allowed foreign investments and incentivised domestic automobile manufacturing by providing reasonable protection from imports. The industry on its part has delivered. It has contributed by way of large investments and employment.
Exports and a focus on the domestic market offer major potential opportunity areas for the Indian auto industry but the sector needs a road map for localisation, according to a report by consultancy firm EY.
As per the report, 'Atma Nirbhar- The Roadmap to Increase Localisation and Harnessing Export Potential of the Indian Auto Industry', the industry generated business worth over Rs 30,000 crore annually through import substitution and local manufacturing through initiatives such as 'Make in India'.