High fuel, metal prices take toll on auto parts biz
GST rate for automobile spare parts stands highest in the country with 28%
image for illustrative purpose
New Delhi: The automotive spare part industry, marred by high GST rates, is witnessing another setback due to a rise in prices of fuel and steel, aluminium in the country. While the domestic production of automobile spare parts is enormous in India, the current challenges pose a threat to the existence of the key sector in the long run.
Speaking to Bizz Buzz, R K Chaddha, president, Federation of All India Automobile Spare Parts Dealers Association (AIASPDA) and Delhi Motor Traders' Association, explained different deterrent factors which have led to small-time automotive spare parts dealers to pull down the shutter.
"Automobiles are no longer a luxury, but necessity. The GST rate for automobile spare parts stands highest in the country with 28 per cent.
Since 2017, we have made several efforts to reach out to different ministers, local leaders and even GST authorities to relook into the revision of the rates," Chaddha said.
As per the current GST rates, the majority of automobile spare parts fall under the 28 per cent tax slab, while a few come under the 18 per cent slab. For parts under the code 8708, with the description 'parts and accessories of the motor vehicles of headings 8701 to 8705', the rate of GST imposed is 28 per cent, divided equally between the State and the Centre. Parts like rubber hoses (code 4008 / 4009) and screws and nuts & bolts (code 7318) attract a lesser rate of GST (18 per cent).
The recent rise in fuel prices and fluctuating rates of steel and aluminium have also made it difficult for automobile spare parts manufacturers to procure the raw material, let alone assemble it and distribute it country-wise. While the petrol prices have breached the Rs 100/litre mark in some parts of the country, diesel rate touched Rs 93.61/litre on Friday.
"We are already shelling out more from our pockets due to high GST rates and now the rising fuel prices, which means that we have to spend more on the logistics as well. The other issue is that the transporters extort extra charges from us for each carton of raw or semi-finished products. We have complained about this to local police and MLAs in our areas. This nexus needs to be stopped," Chaddha said.
According to him, these 'additional charges' by transporters are not accounted for and is not mentioned under the WayBill for consignments of goods. Delhi is the largest feeder of automobile spare parts in the country.
"In the past five to six months, prices of steel and stainless steel have increased by 20 per cent to 25 per cent. This too has affected the industry. If all these factors continue in exist in a big way, then this be an end to the automobile spare parts industry within the next five years," he added.
