Beijing/shanghai:China’s top auto dealers’ association has asked the government to halve taxes on car purchases to revive faltering sales, sources said, as worries grow the country’s auto market could shrink this year for the first time in decades.
The China Automobile Dealers Association (CADA) submitted documents last month to the country’s finance and commerce ministries proposing the 10 percent auto purchase tax be halved, two people at the industry body told Reuters.
The influential body has made proposals in previous years that have helped shape auto policy. When China last cut the purchase tax three years ago, car sales soared in the world’s biggest auto market that is a key battleground for global car makers from General Motors to Toyota Motor.
CADA’s initiative comes as Beijing itself seems concerned about China’s auto industry, an important barometer of the health of the world’s second largest economy. It has launched stimulus measures as a bruising trade war with the United States is pressuring economic growth.
One of the people said the commerce ministry met with automakers this week to discuss the market and ways to spur growth, which included purchase tax cuts – a signal the central government may be warming to the idea.
“The overall car market is weak this year. Dealers I know are struggling to maintain their sales volumes as they feel pressure from both car makers and cash flow,” said the second person, a CADA official.
He confirmed the industry body had proposed to the two ministries to lower the purchase tax rate. “We asked for a 50 percent cut but any reduction could help.”
The first person, a CADA insider familiar with the plans, said the association was seeking a 50 percent cut to the purchase tax on cars with engines of 2.0 litre capacity or below, similar to the tax rebate on smaller-engine cars that helped drive rapid growth in 2016.
This person added it was unclear what the finance ministry and commerce ministry would do in response, but that the latter had met with car makers earlier this week to “discuss the performance of the auto market, sales trends and taxation”.
China’s Ministry of Finance and Ministry of Commerce did not immediately respond to requests for comment. The CADA insiders did not want to be identified because of the sensitivity of the matter.
CADA secretary general Xiao Zhengsan said the market might see a slight decline this year, but measures like promoting the rural car market or adjusting VAT for second-hand cars may bolster sales. He did not comment on the purchase tax cut proposal.
A spokesman for the China Association of Automobile Manufacturers (CAAM), Xu Haidong, said the nation’s top auto industry body had not proposed cutting the purchase tax.
Cabinet clears setting up of centralised GST appellate authority
New Delhi: The Union Cabinet on Wednesday approved setting up of a centralised Appellate Authority for Advance Ruling (AAAR) under the goods and services tax that would decide on cases where there are divergent orders at the state level.
The setting up of a centralised AAAR would require amendments to the GST Acts. The centralised authority as an appellate body will only take up cases wherein the Authority for Advance Ruling (AAR) of two states have passed divergent orders.
The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, and comprising state counterparts, in December decided to establish the centralised AAAR.
“The Cabinet has cleared the GST appellate authority,” a source said after the meeting of the Cabinet headed by Prime Minister Narendra Modi.
In view of the confusion created by contradictory rulings given by different AARs on the same or similar issues, the industry had been demanding a centralised appellate authority that could reconcile the contradictory verdicts of different AARs.
Urbanisation to be big driver of Indian economic growth: Kant
Davos: Urbanisation will be a big driver of economic growth in India going forward, supported by favourable macroeconomic factors, accelerated infrastructure building and continuing reforms, NITI Aayog CEO Amitabh Kant said.
Speaking here at an event on sidelines of the World Economic Forum Annual Meeting, he also said the Indian economy may even exceed the IMF growth forecast of 7.5 per cent for the country.
Kant said IMF has forecast 7.5 per cent growth for India despite a gloomy outlook for the global economy and this itself is good, though there are expectations that this estimate would be surpassed. He said India is giving a big push to urbanisation with more than 100 smart cities being developed.
The country is also using technology in a big way to change the way business and governance is done, he added. Besides a massive infrastructure building is happening, bank credit flow has rebounded and macroeconomic factors like inflation and fiscal deficit are also being supportive, Kant said.
DIPP Secretary Ramesh Abhishek noted that states are competing with each other to attract investments and all political parties have adopted the economic reform process. He listed various reform initiatives undertaken in India, including on areas like ease of doing business, FDI, manufacturing and taxation.
They were speaking at Institutional investors’ breakfast roundtable, organised by the industry chamber CII and Kotak Mahindra Bank. Other participants included CII Director General Chandrajit Banerjee and leaders from Indian and foreign companies.
On questions about some persisting issues in doing business including on tax and insolvency related issues, Abhishek said a lot of efforts have been put in to remove all bottlenecks and starting a business doesn’t take more than a day. Besides, special provisions have been made for startups and angel investors, he added.
Kant said efforts are also being made to remove all physical intervention and digitise the entire process of inter-ministerial and inter-department consultations to fast-track the decisions.
India will surpass China, says Raghuram Rajan
Davos: India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries, former RBI Governor Raghuram Rajan said.
Addressing a session on Strategic Outlook for South Asia, Dr Rajan said that the Indian economy would continue to grow while growth rate is slowing down in China.
“Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter-balance to India in the region,” Dr Rajan said at the WEF Annual Meeting 2019.
“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.
The comments assume significance with China working on a lot of infrastructure projects across the region. In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second large with a GDP of $12.23 trillion.
At the same session, Nepal PM K.P. Sharma Oli cited collaboration with China as well as India as reasons for the economic growth.