India’s passenger vehicle (PV) exports remained flat in 2017, plagued by the issue of GST refunds to automobile manufacturers, which has touched ₹2,000 crore since the implementation of the new tax regime.
According to the Society of Indian Automobile Manufacturers (SIAM), PV exports from India stood at 7,38,894 units last year as against 7,38,137 units in 2016, a marginal growth of 0.1%.
“The system of GST refund is not functioning and [is] having an impact on exports of passenger vehicles. In December, we had a meeting of five-six top exporters and what we found was that the pending refund amount is around ₹2,000 crore,” SIAM deputy director general Sugato Sen said.
The issue has affected companies which export more from India than they sell in the domestic market, he added.
“One particular company had around ₹800 crore of pending GST refund,” Mr. Sen said, adding those companies that had substantial domestic sales could still afford to manage the blocking of capital.
Under the GST regime, payments are made upfront and manufacturers claim input tax credit refund later.
As per SIAM data, after the new tax became reality in July 2017, exports began to decline rapidly.
In January-March 2017, exports grew 12.56% to 1,82,473 units against 1,62,103 units in the year-earlier period. Similarly, in April-June, it increased 13.79% to 1,80,669 units from 1,58,770 units.
But, in July-September, exports declined by 12.87% to 1,81,423 units as against 2,08,223 units. In October-December too, PV exports stood at 1,94,329 units as against 2,09,041 units, a decline of 7.04%.
Manufacturers such as Ford India and Volkswagen India had in November expressed concern over the challenges related to GST refund. VW India had even stated that it could be forced to rethink on exports if the challenge was not resolved. Mr. Sen added that one of the reasons for drop in PV exports was also due to a major exporter like Hyundai focusing on catering to the growing domestic demand.
Source: The Hindu
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