2019 Union Budget: The 2019 Budget has been announced, and while the automotive industry was not mention directly, Finance minister Piyush Goyal did reaffirm the government's commitment towards Electric Vehicles and their mission for 30% electric mobility by 2030 saying that it was crucial for India to embrace electric mobility in order to overcome India’s reliance on imported fossil fuels and gas, and greatly boost sustainable energy in India. However it seems that the common feeling in the Industry seems to indicate that the budget will open up more monthly income for the middle class and therefore indirectly improve sales over time. We spoke to people from across various parts of the Auto Industry to see what they think of the 2019 Union Budget.
First up, on the impact on the budget for the two-wheeler sector, Mr Venu Srinivasan, Chairman, TVS Motor Company Limited who said “This budget has empowered and increased buying capacity of every sector and segment of people. Tax exemption up to Rs. 5 Lakh per annum income for individual taxpayers is a historical step, which will provide more disposable income at hand for the working class. The decision will have an impact and there we expect more buyers of two-wheeler vehicles and in turn help the industry’s growth. The construction of rural roads having an allocation of Rs 19000 crores under the Pradhan Mantri Gram Sadak Yojana will be another boost towards demand for rural economy. Two-wheeler industry in rural sector will also be positively impacted as Rs 6,000 per year cash support to about 12 crore small and marginal farmers will be provided under Pradhan Mantri Kisan Samman Nidhi scheme, which will cost the exchequer Rs 75,000 crore annually.”
Meanwhile Electric Two-wheeler manufacturers also seemed to be happy push for electric mobilit in the budget with Tarun Mehta, Co-Founder and CEO, Ather Energy said "The call out of electric mobility being one of the pillars of the Indian economy in the Interim Budget is a humbling acknowledgement of the nascent industry. Over the past few months, ministries like Power, Urban Planning and Finance have been announcing policies to drive adoption of electric vehicles. Specifically, we welcome the Department of Revenue's relief on import duty of lithium-ion cells. Reduction of the custom duty on the knocked down kit of vehicles, however, goes against the spirit of "Make in India" since it might lead to flooding of the market with low-quality vehicles. We need a long term view to empower OEMs to build and “Make in India”.
The Society of Indian Automotive Manufacturers (SIAM) issued a statement saying “SIAM welcomes the Interim Budget 2019-20 announced by the Hon’ble Finance Minister today. The budget has taken in consideration all sections of the society, especially the distressed farmers and the weaker section of the society, to extend benefits in the form of direct transfers and tax sops. Also, it has equally made progressive expenditure plans through higher budgetary allocation for infrastructural development and social measures. The increase in income tax exemption upto Rs 5,00,000 is expected to positively impact consumer sentiment and consumption expenditure, which will give impetus to demand for two-wheelers and small passenger vehicles, while overall improvement in the road infrastructure will ease movement of people and goods on the road and have multiplier effect on the economy.”
“It is encouraging to hear the Hon’ble Finance Minister acknowledging the thriving Indian automotive industry and having faith on it becoming a global manufacturing hub for vehicles in the years to come. SIAM is happy to note the emphasis laid on electric mobility in the 2030 Vision of Government of India that aims at increasing energy security, reducing oil import dependence and reduce vehicular pollution. SIAM would work with Government in creating an ecosystem that would enable us to achieve the target of becoming the world leader in electric mobility.
Ministry of Finance has recently notified definition and customs duties for Completely Built Unit (CBU), Semi-knocked down unit (SKDs) and Completely knocked down units (CKDs) of all categories of electric vehicles. The move has been welcomed by SIAM, however the customs duty for lithium ion battery has been increased from Nil to 5% for electric vehicle manufacturing. Since cell manufacturing is at very nascent stage at present in India, the current practice of importing cells is expected to continue and hence the change will only lead to increase in cost of manufacturing Electric vehicles battery packs, which is expected to be dampener in generating demand for electric vehicles. SIAM requests a review of increase in customs duty on cells.SIAM is very enthusiastic of India leading the world economy through high economy growth in the next few years and the announcement by Hon’ble Finance Minister stating target of becoming USD 5 trillion economy in next 5 Years and USD 10 Tn economy in next 8 Years rejigs reassures us that the future is bright.”
SIAMs equivalent in the Electric Mr Sohinder Gill, Director General- Society of Manufacturers of Electric Vehicles (SMEV), said “Prime Minister Shri Narendra Modi’s and Finance Minister Shri Piyush Goyal’s mission of bringing an Electric Vehicle revolution to India by 2030 is a truly path-breaking and will surely provide much-needed impetus to the industry. The government’s focus on the use of clean energy in the transportation sector would certainly help our country tackle the issue of climate change. EV industry welcomes our Hon'ble Finance Minister’s commitment towards making the country pollution free, in his budget speech 2019-2020. We hope the government would soon announce a concrete plan of action with its time-bound implementation to fulfil its stated vision. SMEV strongly feels that an initial high dose of incentives and actions must be taken in the next 1 or 2 years to relaunch the electric mobility mission that has sort of lost steam in the recent years due to flip flop of policies. We have witnessed that EVs are more popular in semi-urban and rural areas. Gov allocation of RS 19,000 crore under Pradhan Mantri Gram Sadak Yojana would further expand the market for EV manufacturers. Since no substantial schemes were announced on electric vehicles in the budget, we expect that the government would announce specific action plans to reach the 1st one million electric vehicles on the road by 2021.”
Congratulating the Union Finance Minister, Piyush Goyal, President ACMA, Ram Venkataramani, said, “The Budget unveiled by Hon’ble Finance Minister is indeed inclusive, growth oriented and technology focused. It lays a strong foundation for India’s economic growth for the next decade. The budget has given a much-needed focus to growth and development of the rural economy by extending necessary incentives to it. Further, increasing the zero tax income limit to Rs. 500,000 will be a shot in the arm for the middle-class thus boosting market sentiments. These measures will lead to improved sales of automotive products, especially two-wheelers, farm equipment and entry level passenger vehicles which in turn, will fuel growth of the domestic auto component industry. With an eye on leapfrogging the country on technology front, the setting up of a National Centre on Artificial Intelligence is truly welcome. This will facilitate development of newer skill sets in the wake of the disruptive technological trends being witnessed by the automotive industry.”
“We are also glad to note that the Government wishes for India to lead the world in transport revolution on the back of electric vehicles. We urge the Government to define a technology agnostic road map for xEVs (hybrid and electric vehicle), with a well-outlined plan for component manufacturing to support the same. It needs to be ensured that import tariff on components for xEVs is progressively enhanced to 15% to realize the vision of ‘Make in India’. That apart, enabling research in component development for xEVs through a Technology Development fund is also the need of the hour”, added Ram.
Commenting on Budget 2019, Sachin Haritash, Founder, Mavyn - A Digital Trucking Startup said, "We welcome the announcements made by the government in Budget 2019. The enhancement and impetus which the government has bestowed on Startups is really commendable. We look forward to the implementation of announcements made in the Budget. This will lead to creation of more jobs in the transportation and logistics industry, especially amongst the rural youth. With the widening reach of the internet, creation of digital villages, wifi hotspots and hubs last mile connectivity and outreach will improve."