Auto sector gets boost, electric vehicles to become cheaper

PUNE: Indian automobile industry honchos and experts on Wednesday said various provisions and outlays in the budget would boost auto sales all around, including electric vehicles.

“The increase in outlay for capital spending, increase in spending on infrastructure, setting up 50 new Airports, creation of 100 Transport Infrastructure projects, central support for replacing old vehicles should all drive demand of vehicles,” Rajeev Singh, Partner and Automotive Sector Leader at Deloitte India, said on the impact of the budget on automobile sector.

He said focus on agriculture and rural India are also steps in reviving the rural economy which would impact the two-wheeler industry and entry level cars positively. “Overall, the focus on Green India should also assist in transitioning the auto industry to clean mobility,” Singh pointed out.

Vinod Aggarwal, president at Society of Indian Automobile Manufacturers and MD & CEO at VECV, said, “The 33 per cent increase in capital outlay with an effective provision of Rs 13.7 lakh crores will spur growth in the economy resulting in positive impact on the auto sector.”

He said the auto industry was fully aligned with the initiatives on sustainability and decarbonisation and increased focus on hydrogen, ethanol Blending, bio gas, electric vehicles and battery storage.

“The populist will help boost auto sales all around,” FADA president Manish Raj Singhania, said. While the capital outlay of Rs 10 lakh crore in infra spending will definitely aid commercial vehicle sales, the aim to scrap all old government vehicles by aiding State governments will boost all segment sales, he pointed out.

Apart from this, Singhania said the reduction in individual tax slabs will benefit the ailing entry level two-wheeler and passenger vehicle segment. “Reduction in the highest tax surcharge from 37 per cent to 25 per cent will also benefit luxury vehicle sales. With focus on electrification, relaxation on import duties of Lithium ion batteries will help in price reduction of EVs, thus making it affordable for the masses,” he said.

On the business front, being part of the MSME universe, cost of credit guarantee will reduce by 1 per cent, thus helping auto dealers in raising funds, Singhania said.

The extension of the subsidy on electric vehicle batteries for one year would make electric vehicles or EVs cheaper and boost their growth in the country.

“I propose to continue the concessional duty on lithium-ion cells for batteries for another year,” FM Nirmala Sitharaman said while presenting the Budget.

In May 2021, the government launched the production linked incentive (PLI) scheme for manufacturing batteries. It has also doubled the funds in the FAME scheme.

The PLI scheme was aimed to bring down prices of this core key component of electric vehicles. The Goods and Services Tax (GST) on sale of electric vehicles was also reduced from 12 per cent to 5 per cent.

“We applaud the budget for making Green Growth one of the top seven priorities. The Pro-EV budget focuses on much-needed initiatives such as customs duty reduction from 21 per cent to 13 per cent on Lithium Batteries and an extension of the subsidies on EV batteries for one more year. These are welcome initiatives as these will help boost the demand,” Kalyan C Korimerla, MD & Co-Promoter at Etrio Automobiles, said.

Brokerage firm ICICI Direct said increase in tax exemption limit with consequent more disposable income for taxpayers is a positive development for domestic automobile space and shall spur growth for the domestic passenger vehicle industry and also for the two-wheeler segment.