AP reduces VAT on auto components to 5%

The decision comes on a day the SIPB headed by chief minister N Kiran Kumar Reddy cleared four investment proposals of which two are in the automotive sector

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The Andhra Pradesh government has reduced the value added tax (VAT) rate on auto components to 5% from the existing 14.5% to expand the automotive manufacturing base in the state.

The decision comes on a day the State Investment Promotion Board (SIPB) headed by chief minister N Kiran Kumar Reddy cleared four investment proposals of which two are in the automotive sector.

Industry minister J Geeta Reddy on Friday said the reduced VAT rate would apply to the components manufactured in AP only.

The SIPB has cleared a Rs 300-crore investment proposal made by Mahindra & Mahindra for setting up of a new 4-wheeler transport vehicle plant at its existing facility at Zahirabad here, according to the minister. Mahindra had recently inaugurated its 100,000-unit capacity tractor manufacturing facility and is also in the process of developing an auto ancillary park at Zahirabad in partnership with its existing supplier firms.

The board also cleared the Rs 1,500-crore pick-up truck and sports utility vehicle manufacturing plant proposed to be set up at Sri City industrial park by Isuzu Motors. Last month, Isuzu had signed an MoU with the state government for the proposed manufacturing plant, under which the government had agreed for a VAT reimbursement in proportion to the investment committed.  

The government has cleared two more proposals with a proposed investment of Rs 600 crore at today's meeting.

SIPB normally considers those investment proposals that seeks government incentives over and above what has been proposed in the industrial policy. The SIPB also made medium density fibre boards, particle boards and their products as eligible for incentives under the industrial promotion policy.