Though the automobile sector received little attention in the Budget, the industry felt that new proposals and schemes directed at infrastructure will grow its sales.
This time round there were no announcements on excise duty cuts or new tax regimes, but the proposal on new roads and re-affirmation on implementing GST from April 2016 was welcomed.
This shall help manufacturers develop concrete long-term plans for products and investments, said Vikram Kirloskar, President, Society of Indian Automobile Manufacturers.
“The reduction in corporate tax from 30 per cent to 25 per cent over the next four years lays down a clear roadmap, removing uncertainties for the industry,” he said.
According to industry watchers, the tariff rate increase from 10 per cent to 40 per cent for commercial vehicles and effective rate from 10 per cent to 20 per cent would make import of such vehicles costlier, thereby encouraging local manufacturing.
“While there has been no excise duty modification in the automotive sector, I believe that long-term demand creation is more sustainable than short-term sops to boost consumption. The Government has moved in exactly this direction,” Vinod K Dasari, Managing Director, Ashok Leyland, said.
The ₹70,000-crore increase in infrastructure investment, revitalisation of PPP model for infrastructure, development of one lakh kilometres of new roads will impact commercial vehicles, which had negative growth last year, said Rajeev Singh, head of automotive sector, KPMG.
The industry continues to be hopeful that the Finance Minister will also address the anomalies of the inverted duty structure in the immediate future and give a fillip to tyre manufacturers to ‘make in India’, said Onkar S Kanwar, Chairman, Apollo Tyres.
According to Arvind Saxena, President and Managing Director, General Motors India, these proposals and announcements, if implemented effectively, should have positive impact on the industry and the economy.
“We expected more of a direct support to the auto industry, which has been contributing significantly to the GDP,” Joe King, Head, Audi India, said.
Our Bengaluru bureau adds:
Vikram S Kirloskar, Vice-Chairman, Toyota Kirloskar Motor Pvt Ltd and President of the Society of Indian Automobile Manufacturers (SIAM), called it a pro-India budget that would strengthen the social fabric, improve governance and tax rationalisation. He said it was overall a positive budget for corporates and individuals.
Welcoming the reduction in customs duties on raw materials, N Raja, Director and Senior Vice-President (Sales and Marketing), Toyota Kirloskar Motor Pvt Ltd, said, “While this is good news for the automobile sector, we were hoping for a reduction in excise duty as well, as that would have helped put the industry back on the growth trajectory. The Finance Minister announced the allocation for developing greener electric cars; we would need to study this in detail to find out its implication for developing alternative fuels and promoting hybrid as a technology in India.”
Kamal Bali, Managing Director, Volvo India Pvt Ltd, pointed out that special additional duty exemption had not been extended to automobiles. “More needs to be done for the manufacturing sector, especially automotives, as it continues to reel under the dual effects of excess capacity and anomalies in indirect taxation,” he said.
(This article was published on February 28, 2015)
