The government should also fix the DEPB rates (duty entitlement passbook scheme) for all categories of vehicles including commercial vehicles and passenger cars at 14 per cent. The DEPB rates for about 138 auto components have already been notified at the average rate of 13.52 per cent. The auto industry has also sought reduction in import duty on capital goods and on all categories iron and steel be brought down by 5 per cent (from 25 to 30%) and on aluminium to 10 per cent; and a 100 per cent import duty/excise duty exemption for R&D related capital expenditure.

Presenting a bleak growth scenario, the industry witnessed a nil growth in terms of number of vehicles sold in 1997-98, as against 20 per cent growth during 1993 to 1996. In order to revive sagging growth, the excise duty on commercial vehicles be brought down to 10 per cent from 15 per cent, passenger cars 25 per cent (40 per cent), multi-utility vehicles 20 per cent (30 per cent) and auto components at 10 per cent (18 to 30 per cent). It has said that the restriction of Modvat credit to 95 per cent, which was imposed in the budget this year, should be withdrawn. It may be pointed out that these suggestions are to be finalised by the AIAM in the next few weeks and forwarded to the government for the Budget 1999.

In order to clear the consignments from different ports/airports without delay, a provision for issue of split up licences under the EPCG scheme be made in the import policy. New companies (having on export track record) that have signed an MoU with the government should also be dispensed from providing bank guarantee. In order to be competitive and meet the challenge of free import of vehicles from 2000, an appropriate customs duty structure is necessary so that there is no dumping ground for cheap imports into the country. Thus, the customs duty on second-hand/used vehicles should be 70 per cent, intermediates and components 20 to 25 per cent, raw materials and capital goods at 10 to 15 per cent.

The industry has sought a higher rate of depreciation at 100 per cent for commercial vehicles in the year of purchase. This facility could be extended for replacement of old vehicles against a certificate from the RTO, for limited period of two years, to give an initial boost to demand. Also, the earlier provision of Income Tax Act granting full depreciation irrespective of date of capitalisation should be reintroduced.