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Luxury vehicle manufacturers’ disappointed over move to hike cess ceiling

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Mumbai/Chennai, Aug 7 : Luxury vehicle manufacturers on Monday expressed their disappointment over GST Council’s recommendation to the central government for a hike in maximum cess ceiling leviable on luxury, sports utility vehicles (SUVs) among others.

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The Ministry of Finance in a statement said that decision to recommend a hike in the “maximum ceiling of cess” was taken at the Council’s meeting on August 5.

“The GST Council considered the issue of cess leviable on motor vehicles in its 20th meeting held on August 5 and recommended that central government may move legislative amendments required for increase the maximum ceiling of cess leviable on motor vehicles falling under headings 8702 and 8703 including SUVs, to 25 per cent instead of present 15 per cent,” the ministry said in a statement.

“However, the decision on when to raise the actual cess leviable on the same would be taken by the GST Council in due course,” it said.

The ministry revealed that the decision to recommend a hike in cess cap was taken after the Council noticed that post the roll-out of GST, the total tax incidence on motor vehicles had come down as compared to pre-GST regime.

On industry’s side, luxury car maker Mercedes-Benz India voiced its disappointment.

“We are highly disappointed with the decision. We believe this will be a strong deterrent to the growth of luxury cars in this country,” Roland Folger, MD and CEO, Mercedes-Benz India, was quoted as saying in a statement issued by the company.

“As a leading luxury car maker, this will also affect our future plans of expansion under ‘Make in India’ initiative, which aims at making and selling world-class products in India, with the latest technology for end-consumers,” he added.

Folger pointed out that the recommendation will reverse the positive momentum that the industry wanted to achieve with the introduction of the GST.

“With this hike in cess, we expect the volumes of the luxury industry to decelerate, thus offsetting any growth in the potential revenue generation that could have come with the estimated volume growth,” Folger said.

He also called for the need for a long-term road-map for the luxury car industry in India.

“The constant shift in policy makes our long-term planning for the market highly risky, and we think this would only have an adverse impact on the country’s financial ratings,” Folger said.

On its part, Audi India announced a sales offer on a range of models including Audi A3, Audi Q3 and Audi A4.

“Keeping in mind the proposed increase in cess, this is an opportune time to join the Audi family and additionally also benefit from the privileges of the Audi India club,” said Rahil Ansari, Head Audi India.

According to Shrikant Akolkar, Research Analyst- Automobiles, Angel Broking: “The likely hike in the cess rate from current 15 to 25 per cent is not expected to see a materially negative impact on the demand for the premium automobiles.”

“The underlying demand remains healthy which is the driving force for the automobile sector. We believe that companies will be able to pass on the cess hikes on luxury vehicles/UVs to customers by price revision.”

Further, Suresh Nandlal Rohira, Partner, Grant Thornton India LLP said: “The increase in compensation cess on luxury cars from 15 per cent to 25 per cent is purely an attempt of anomaly correction by the government on realising the revenue loss it would undergo.”

“Although, it would take away the luxury for higher segment car buyers with an additional tax burden of 10 per cent, however such frantic changes and corrections for each sector may convulse the confidence of the Industry and also lead to re-planning of their sales strategy and cost impact thereon.”

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Gross NPA may rise to Rs 9.5 lakh crore by March: Study

“Fiscal 2018 marks beginning of third phase of ARCs which promises to change the landscape as new regulations and other changes kick-in.”

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NPA

Gross non-performing assets (NPA) in Indian banks are expected to rise to Rs 9.5 lakh crore by March, from Rs 8 lakh crore in March last year, said a ASSOCHAM-Crisil joint study.

Stressed assets in March 2018 are expected to be at Rs 11.5 lakh crore, the report titled “ARCs headed for a structural shift,” said.

“High level of stressed assets in the banking system provides enormous opportunity size for asset reconstruction companies (ARCs) which are an important stakeholder in the NPA resolution process,” ASSOCHAM said in a statement quoting the study.

It, however, said that owing to capital constraints, growth of ARCs is expected to come down significantly.

“While growth is expected to fall to around 12 per cent until June 2019, however the AUM (assets under management) are expected to reach Rs 1 lakh crore, and that is fairly sizeable.”

The study added that with banks expected to make higher provisioning over and above the provisions made for stressed assets, they may sell the assets at lower discounts, thus increasing the capital requirement.

The study also said that effective implementation of the Insolvency and Bankruptcy Code would be a remedy to the challenge of prolonged litigation and it can help improve the recovery rate of stressed assets’ industry further.

Power, metal and construction sectors contribute the bulk of stressed assets. According to an analysis of 50 stressed assets (forming nearly 40 per cent of stressed assets in the system), sectors like metal, construction and power form nearly 30 per cent, 25 per cent and 15 per cent respectively, while other sectors together form the remaining 30 per cent.

The report stated that 2018 would see a structural shift in the stressed assets’ space as increased stringency in banks’ provisioning norms for investments in security receipts (SRs) is likely to result in more cash purchases.

“Fiscal 2018 marks beginning of third phase of ARCs which promises to change the landscape as new regulations and other changes kick-in.”

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Key Indian equity indices open at fresh highs

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Mumbai, Jan 22: Key Indian equity indices opened at fresh highs during the early morning trade session on Monday, with healthy buying observed in oil and gas, energy and consumer durables stocks.

At 9.20 a.m., the wider Nifty50 of the National Stock Exchange (NSE) traded 8.05 points or 0.07 per cent higher at a new high of 10,902.75 points.

The barometer 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 35,613.97 points, traded at a fresh level of 35,613.73 points — up 102.15 points or 0.29 per cent — from its previous session’s close.

The Sensex has touched a new high of 35,664.01 points during the intra-day trade so far.

The BSE market breadth was bullish as 454 stocks advanced as compared to 238 declines.

On Friday, positive global cues, coupled with upbeat quarterly corporate earnings and healthy buying in banking stocks, propelled the key indices to close at new record highs.

The Nifty50 closed at 10,894.70 points, while the Sensex closed at 35,511.58 points.

IANS

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Amazon opens supermarket with no checkouts

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Amazon Go

Washington, Jan 22: In a move that could revolutionise the way we buy groceries, Amazon opens its first supermarket without checkouts — human or self-service — to shoppers on Monday.

Amazon Go, in Seattle in the US, has been tested by staff for the past year, BBC reported.

It uses an array of ceiling-mounted cameras to identify each customer and track what items they select, eliminating the need for billing.

Purchases are billed to customers’ credit cards when they leave the store.

Before entering, shoppers must scan the Amazon Go smartphone app. Sensors on the shelves add items to the bill as customers pick them up – and deletes any they put back.

The store opened to employees of the online retail giant in December 2016 and had been expected to allow the public in more quickly.

But there were some teething problems with correctly identifying shoppers of similar body types – and children moving items to the wrong places on shelves, according to an Amazon insider.

Gianna Puerini, head of Amazon Go, said the store had operated well during the test phase: “This technology didn’t exist — it was really advancing the state of the art of computer vision and machine learning.”

Amazon has not said if it will be opening more Go stores, which are separate from the Whole Foods chain that it bought last year for $13.7 billion.

As yet the company has no plans to introduce the technology to the hundreds of Whole Foods stores.

However, retailers know that the faster customers can make their purchases, the more likely they are to return.

Making the dreaded supermarket queue a thing of the past will give any retailer a huge advantage over its competitors.

The Seattle store is not Amazon’s first foray into bricks and mortar retailing, however. In 2015 the firm opened its first physical bookshop, also in Seattle where the company is based. There are now about 12 in the US — including one in New York that opened last year — as well as dozens of temporary pop-up outlets.

In its third quarter results in October, Amazon for the first time put a figure on the revenues generated by its physical stores — $1.28 billion. Yet almost all of that was generated by Whole Foods.

While its stores may not yet be moneyspinners, analysts have said Amazon is using them to raise brand awareness and promote its Prime membership scheme. Prime members pay online prices at its bookstores, for example, while non-members are charged the cover price.

Brian Olsavsky, Amazon chief financial officer, recently hinted that rivals should expect more Amazon shops in the months and years ahead.

“You will see more expansion from us – it’s still early, so those plans will develop over time,” he said in October.

IANS

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