Govt urged to exempt auto part makers from entry tax

The Confederation of Indian Industry has urged the Madhya Pradesh government to exempt motor vehicle parts manufacturers from entry tax.

The state government had brought in an Act - Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam 1976 - and imposed a 1 per cent tax on entry of goods into the local area, their consumption or sale.

However, the automobile sector was given exemption on April 2002 for a period of five years. “It had not been extended from April 2007 and auto parts manufacturers are facing a tough competition during this time of recession from those of neighbouring states,” BS Khargonekar, CII, chairman MP chapter, said. The CII is likely to meet senior government officials soon in this regard.

“The cost of manufacture of automobile or parts has gone up 0.7 per cent or more depending upon model, value and type of motor vehicles due to this. With entry of multinational companies in the segment, the worst sufferers are small scale and medium scale industries in Madhya Pradesh. Uttarakhand has granted special exemptions to automobile manufacturers," the CII said.

At present, automobile attracts 4 per cent value added tax and one percent entry tax. MP has big auto companies like Eicher, Man-Force, Avtec, Mahindra and over 50 auto ancillaries.