The ailing Rs 12,000-crore bicycle industry, the country’s biggest and largest in Ludhiana, has pinned hopes of revival and growth following the Union Government’s assurance of tax relief to promote the trade.
The Centre’s statement that it has begun deliberations to cut GST and rationalise levy on bicycles and their parts has brought cheer to the industry, which has been raising this major demand since long.
Union Minister of State for Finance Pankaj Chaudhary has recently informed Rajya Sabha MP Sanjeev Arora that the issue of reduction of GST on bicycles and their parts had been deliberated by the GST Council in its 31st and 37th meetings. The minister also assured Arora that GST on bicycles and their parts, along with rate rationalisation in this sector, was being examined by the group of ministers on rate rationalisation, constituted by the council.
Arora, the ruling AAP member in the Upper House of Parliament from Punjab, had on November 29 last written to Union Finance Minister Nirmala Sitharaman, seeking rationalisation of GST on bicycles and parts from 12 per cent to 5 per cent with ITC benefits.
MP Arora had highlighted several points, urging the Centre to consider these recommendations in the upcoming GST Council meeting.
He had recommended extending GST reduction to all bicycles, applying the 5 per cent GST rate to all bicycles, not just those priced below Rs 10,000, to avoid complications in tax administration and to maximise socio-environmental benefits. Secondly, he had suggested including bicycle parts in the 5 per cent GST bracket to prevent an inverted duty structure and increased costs for manufacturers. Besides, he had emphasised the importance of ensuring ITC benefits with the 5 per cent GST rate to enable manufacturers to pass on the full benefit to consumers, supporting the ‘Make in India’ initiative.
“It gives a glimmer of hope for the bicycle industry as bicycles are a crucial mode of transport for many and offer significant environmental and health benefits,” the MP said, adding that reducing GST on bicycles and their parts would make them more affordable, curb GST evasion and support the growth of the ‘Made in India’ bicycle industry.
Arora had also taken up the issue during the Zero Hour in the ongoing Budget session of the Rajya Sabha on February 7.
Ludhiana’s bicycle industry mainly manufactures roadster, premium and electric bicycles, both for children and adults with an annual turnover of Rs 12,000 crore. It comprises around Rs 3,500 crore of export business while lighter and premium components based on cost and quality, which are not manufactured here, worth Rs 2,000 crore are also imported by the local industry every year.
Providing employment to 10 lakh persons, the bicycle industry has employed 5 lakh persons each in manufacturing and value chain.
Aggrieved over what they allege as a raw deal by the government, several industrialists are in talks with other states and UTs to explore shifting or expanding their businesses outside.
Speaking with The Tribune, the MD of Avon Cycles, which is one of the leading bicycle brands, said low technology and low-valued bicycles were among main issues being faced by the industry. “We need an early production linked incentive scheme for immediate technology upgrade,” he demanded.
He pointed out that 12 per cent GST on bicycles and spare parts needs to be brought down to 5 per cent, if not made tax free, to promote affordability and create more demand.
“Good governance of research and development is required to meet mandatory standards and to ensure gainful utilisation of Rs 40 crore being invested by the Centre to upgrade the bicycle industry,” the industry captain asserted while stating that the unsafe cycling infrastructure and export disadvantages like high freight, import duty in European Union and testing inadequacy are also hurdles in the industry’s growth.
“It’s a promising industry, which needs an integrated package from the Centre for technology and standard upgrade, besides rationalising tax, testing and export issues,” he added.
Industry reaches out to MP
Leading industrialists had recently reached out to Rajya Sabha MP, Sanjeev Arora, to take up their issues with the government and help their resolution to sustain the existing industry and attract more fresh investment in the textile and bicycle sectors.
Arora had assured the industry leaders to impress upon the government to resolve their genuine problems at the earliest. “Several issues have been resolved during the past three years while talks are on to further facilitate and incentivise the industry,” the MP added.
Source from: https://www.tribuneindia.com/news/ludhiana/12k-crore-ailing-bicycle-industry-pins-hope-on-tax-relief/
