Read our full coverage on Union Budget
The Automotive Component Manufacturers Association (ACMA) also urged the government to implement GST at the earliest and eliminate customs duty on alloy steel as part of its Budget wishlist.
"These recommendations reflect the spirit of the auto component manufacturers who are looking forward for support from the government to revive the industry and to realise their ambition of growing exports to $35-40 billion and build overseas revenues of $20-22 billion over the next five years," ACMA said in a statement.
The industry clocked a turnover of $35 billion in 2013-14 with exports of over $10.2 billion.
"We expect the forthcoming budget to lead to creation of a favourable and stable policy environment to boost industrial revival and enable growth in domestic auto sector," ACMA President Ramesh Suri said.
The association also demanded allowing input credit on diesel. "Due to power shortage manufacturers have to resort to generating their own power though gen-sets thus increasing the cost of production. ACMA has recommended that such manufacturers be allowed to avail input credit on diesel procured for internal power generation.