The very first full-term budget of FY-16 laid down by the new central government was lack-luster for the automotive industry.
Many issues were raised in the past by the Indian automobile manufacturers, like the lowering of base interest rates on sale of cars, additional excise cuts, faster implementation of Goods and Services Tax but none of them seem to have been met apart from allocation of Goods and Services Tax.
The Finance Minister of India, Mr. Arun has stressed on the faster implementation of infrastructure projects to promote industrial growth in this budget.
Budget Details
• An assurance for speedy implementation of the Goods and Services Tax has been given by the central govt. which will bring it into effect from April 2016.This implementation will help to create an unbiased and uniform tax structure across all the various states of India.
• The excise duty was lowered by a narrow margin. Now it is 24%for the SUVs, 20% for the mid-sized cars and 27% for the large cars. For the smaller-sized cars, it has been hiked up from 12% to 12.5% this means that car prices will either remain the same or increase marginally, but will not decrease at any cost.
• Excise duty on the chassis for an Ambulance has been cut down from 24% to 12.5%.
• Corporate tax has been reduced (30% to 25%). This will help to indirectly promote growth within the automotive industry and will give them a chance to recover 5% of their funds. This tax-cut is expected to begin from next year.
• The custom duty for all fully built and imported commercial vehicles has been increased to about 20%.
• An impetus for production of green vehicles has been proposed to the tune of INR 75 crore under the Faster Adoption &Manufacturing of Electric Vehicles (FAME) scheme. The excise duty discount EVS will be maintained.
• The demand to ask banks and other financial institutions to lower the interest rate on vehicles and vehicular loans has not been secured.
• INR70,000 crore will be invested in laying of about one lakh Kilometres of asphalt roads across the country especially rural areas.
To summarize, this budget was really measly for the Indian automotive industry. Nothing has become cheap for the hardworking consumers. The companies can somehow hope to recover a lost revenues due to the cut in excise duty but that will amount to INR 1000 per car only.
For companies grappling to meet their demand-supply schedule, this isn’t enough. Only a miracle can now save the automotive industry from the current turbulent state it is currently in. The chump change allocated in this budget won’t make a very big difference!
Aprit Jain is a blogger and loves to write about automobiles. He has written many articles and blogs for Mahindra Parts