India needs to get its new tax right

June 30, 2015 2:53 pm

GST introduction will be the biggest contributor to ‘Make in India’ initiative.Rajesh Kulkarni, Vice President – Sales & Marketing, Hella India Automotive Pvt. Ltd._________________________________________________________________________________
 Hella India Automotive (HIA), the wholly owned Indian subsidiary of German automotive parts supplier HELLA, is an important electronic and component supplier for the Indian automotive market. HIA is into the business of development, production and the marketing of lighting and electronic components and systems both for vehicle manufacturers and for other suppliers.
With plans to harness its global technologies and customise them for OEMs in India, Hella expanded its Dhankot facility in Haryana in October last year. It introduced state-of-the-art SMT lines for its key focus products – Body Control Module and Remote Key Entry for Indian customers. The company would like to continue its expansion in India. In an interview with OEM Update, Rajesh Kulkarni speaks about Hella’s aggressive strategy in line with the government’s ‘Make in India’ mission.
The advantagesTerming ‘Make in India’ a ‘welcome initiative’ for industry and particularly the automotive industry in India, Mr Kulkarni says, “Automotive component and system suppliers like Hella stand to benefit and this will trigger a chain reaction downstream to the OEMs and the end consumer will get access to world-class products at better value for money.”
Especially for automotive electronics companies like Hella, ‘Make in India’ initiative can drive domestic development. With technological solutions on offer, OEMs will be able to create value proposition for the Indian consumers and for export markets, Mr Kulkarni observes.
“The initiative will create jobs and the industry can do justice to the millions of engineers who are qualified every year in Indian universities. There are significant job opportunities for mechanical, electronics and IT engineers,” he adds.
Success routeTalking about how ‘Make in India’ can achieve success, Mr Kulkarni says, “The main success factors lie in linking the ‘Make in India’ initiative to other policies and schemes of the government and creating a complementing environment.” For example, infrastructure development like expressways, bridges, ports, and railways can act as a boost to ‘Make in India’ in two ways: attract industries to set-up manufacturing base and create demand for commercial vehicles which in turn have set-up plants in the first place.
“Labour law reforms should ensure consistency with ‘Make in India’ schemes,” Mr Kulkarni suggests. “Skill development should be made part of contract negotiations.”
Tax rationalisation is a major reform that the government should execute for ‘Make in India’ success. According to Mr Kulkarni, GST introduction will be the biggest contributor to ‘Make in India’ initiative as multiple filings, reporting structure will be done away with and companies in turn can spend that time and resources in more productive activities like R&D, quality improvement, export marketing, etc. “Chances of graft will also reduce dramatically,” he points out.
Expected govt. initiativesWhile talking on the steps to be taken by the govt to promote domestic manufacturing in his business sector, Mr Kulkarni urged• Create policy framework for usage of electric vehicles (passenger vehicles and 2-wheelers) which will create a market to achieve critical mass for suppliers offering battery, motor and control technologies. • Implement fuel efficiency, emission and safety legislations to be at par with international standards and bring the entire country into this ambit. This will create a market for various new products and technologies within a vehicle.
Hella and ‘Make in India’Hella has made significant investment in a state-of-the-art electronics assembly manufacturing set-up in India. The company would like to continue to expand and invest as and when required. “Hella will bring in new products and technologies which will contribute to environment-friendly, safer and comfortable mobility solutions for all sections of the society. That would include but not limited to sensor products in the areas of exteriors, HVAC systems, battery and steering systems,” Mr Kulkarni informs.