Union Budget 2021 is set to be announced on 1 February as industries look to the government for improved provisions and policies that would benefit the respective ecosystems. Electric vehicles are expected to be in focus in this year’s budget as we get one year closer to the government’s ambition on electric mobility in India by 2030. The components industry will be working in tandem to realising this goal and several others. We got in touch with a key player in the components industry in India, Continental Automotive for a glimpse into what the industry expects from this budget.
Prashanth Doreswamy, Country Head, Continental India & Managing Director, Continental Automotive Components (India) Pvt Ltd:
Manufacturing is expected to be a vital focus area of this budget. This is crucial, post-COVID-19. Towards this, it would be good to have more clarity on the Production-Linked Incentive (PLI) scheme, which can create a significant impact in boosting manufacturing in India.
Specific to the automotive sector, we are in the midst of one of the biggest technology transitions in India and the world. There is a brilliant opportunity for the Indian automotive industry to capitalize. In terms of emission technology, we are already on par with Euro 6 norms, with BS-VI introduction.
To smoothen the transition, we also need to focus on the Scrappage policy, which is expected this year. The government should introduce the Scrappage policy by offering a one-time incentive to rebate in taxes for replacing vehicles that are greater than 15 years and facilitate taking them off the roads. Tightening and scrappage norms for vehicles can support demand creation and help boost demand in the coming months.
Supporting demand creation is very important for the growth of the industry. Demand has picked up post the lockdown. However, there is a concern about rising vehicle prices with the introduction of new safety technologies. It would help to have some incentives for OEMs and the end consumer.
Sharad Malhotra, President, Nippon Paint India – Automotive Refinishes & Wood Coatings
“We are looking forward to the government incentivizing consumers through tax breaks and other measures. We are hopeful of enhanced measures that will increase India’s ranking in Ease of Doing Business and meet the Government’s target to scale up manufacturing to 25 percent of the GDP.
“Going into the next decade, smaller cities and towns are expected to be key consumption drivers and we have realigned our business strategy to outperform in the new normal. As further growth opportunities get unlocked, we are confident that our sector will be able to add to the economic growth of the nation.”
Harsha Kadam, CEO Schaeffler India, and President, Industrial Business:
“The auto components industry will see more investments if further clarity is provided on the PLI Scheme announced in 2020. Implementation of the scrappage policy will also improve sales that will benefit the industry and environment. From an overall manufacturing industry perspective, stabilization of raw material prices is of importance to the industry, promoting finished good exports will in turn increase forex reserve and a positive step.
“The industry also requires some relief in custom duties especially for raw materials and other manufacturing elements. The government is putting efforts in public spending on infrastructure projects that are driving the core sector industries. Considering the year 2020 and the effects of the pandemic, the government should also focus on steps that will enable job creation, which will be a critical success factor. Budget 2021 is hope for many industries and we are looking forward to it with anticipation.”
Manish Bhatnagar, Managing Director, SKF India:
“After the global 2020 interruption, the economy is clearly in the revival mode and we are positive that 2021 will be a game-changing year specifically for the Indian manufacturing sector. The flexible nature of the Indian economy will help expedite the recovery path, however, it needs to be backed by robust policy and investment interventions. We also expect the upcoming budget to address and resolve some of the pain points such as – increased costs of raw materials like steel, rise in import freight, IP safety regulations, and labor laws.”
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