Offerings of the Union Budget-2015 to the Automobile sector

Compiled By: Jay Shah,

FMS-B,The M.S.University of Baroda.

What the industry expected from the . Union Budget 2015?

- Stronger emphasis on the automobile industry - The push for Make-in-India

- More funds allocation for electric vehicle

- Extension of excise duties

Key proposals in UB-2015:

1) The excise duty cut, which was initially implemented across all vehicle segments in February 2014 by the then government, was extended till December 2014 but, it is withdrawn.

2) Fourfold hike in customs duty on commercial vehicles to 40%. This will make the international producers thinking on establishing a plant in India.

One relief, however, was the decision not to waive off the high customs duty (in excess of 125% at the current rate) on imported cars as it makes Indian brands more competitive.

3) Some loose change in the form of Rs 75crore support for electric vehicles under Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme for FY'16.

Still too little to be spread across the entire eco-system of infrastructure, R&D and product subsidy to have a meaningful impact.

4) Budget has the potential to raise the consumer sentiment which will help the industry grow(for demand creation).

Revised tax slabs for the corporates and individuals is an advantage which will leave them with the more spending capacity.

5) This budget offers is a big push on infrastructure.

The increased allocation towards infrastructure sector, especially roads & highways and greater focus on reviving private sector investments in the infrastructure space will be a positive in driving demand

Road development augurs well for automotive industry, especially M&HCV and earth-mover industry as well as their suppliers.

Issues still needing attention

- No move to make car loans cheaper

- No positive hopes for removal of dumping restrictions in tyre industry

- Overloading on commercial vehicles

- Replacement of older vehicles to promote cleaner environment and fuel-efficient vehicles

- Indirect positives including reiteration of GST implementation timeline of April 2016

- More funds allocation for electric vehicles R&D

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