While the pandemic caused large-scale disruptions across the globe, one of the most impacted sectors in the aftermath was the auto sector. In 2019, the auto industry saw a sharp spike, but there was a rapid decline since the onset of the pandemic, and the industry now demands a much-needed boost. The global crisis has put a massive strain on the sector, which accounts for almost half of India’s industrial GDP, and nearly 7.5% of the country’s overall GDP.
The automotive industry has undergone a significant transformation thanks to evolving consumer preferences. With public transportation being ruled out due to safety concerns and the purchase of a new vehicle deemed unviable for most, rental car services have seen a surge in demand. As the sector gradually begins to recover with people stepping out of their homes once again and the need for efficient, hassle-free transportation/commute rising, it’s essential that the industry receives ample support from the government. The upcoming Union Budget 2022-2023 can be a game-changer, especially in speeding up the recovery process and facilitating growth and progress in the coming months/years. That said, here’s what the sector expects from this year’s Union Budget.
The promotion of EVs and renewable fuel options
The introduction of Electric Vehicles (EVs) and the government’s emphasis on renewable fuels technologies have sparked confusion among consumers; they are now facing the dilemma of whether to opt for an EV immediately or postpone this plan. The primary reason for this is the lack of robust EV infrastructure required to create a conducive environment. Transitioning to electric vehicles was unavoidable, putting pressure on automakers to make significant investments to stay competitive.
Given the volatile situation we live in, the future is uncertain, and there is a need for some form of tax and other regulatory measures with their interpretation. The government is responsible for making the country more attractive for investors to invest in various Indian start-ups, with the rapid increase in the demand for rental cars by the public rather than buying one. Many investors are interested in investing in various EVs and other shared mobility options. Hence, in general, the industry and people expect clarity in this context.
Indirect and Direct Tax Support
The auto sector anticipates strong support from the government in the Union Budget 2022-23 in several areas, particularly direct and indirect taxation, and policy initiatives. The government’s top requests include lowering the GST rate on electric vehicles and vehicles in general and taking steps to increase the salaried class’s disposable income. Given the historically low-interest rates on auto loans, the government may consider expanding the possibility of tax deductions on loan EVs to other vehicles. The government aims to convert all Indian automobiles to electric cars by 2030. However, more needs to be done to raise EV awareness and improve consumers’ long-standing consumption habits. It is a comprehensive approach that lays the path for India to make a significant investment in EVs.
Subscription and Rental Vehicles Sector Expectations
Perhaps the most feasible, convenient, and seamless option for consumers to adopt EVs is through rental car/shared mobility platforms. Users can try out EVs without the bother of full ownership by renting them for a short amount of time or signing up for a subscription for a longer duration. This way, they can later decide if they want to own an electric vehicle or are just happy to rent the car. Both are the plus points when it comes to saving non-renewable fuel and switching to a more economical and sustainable method of travel. Hence, there has to be something in the overall auto policy that addresses the concerns of this massive and crucial sector that will shape the way the country is going to travel in the future.
Technology-based development has to be the main focus of this 2022-2023 Union budget. India is witnessing one of the most significant technological advancements in the world. This year’s Union Budget is expected to place a greater emphasis on tech-driven improvements in the auto industry. It’s a fantastic chance for the industry to seize on and expand. The government is also taking steps to ensure that customers receive tax breaks if they acquire an electric vehicle.
To increase demand, the government should focus on improving infrastructure to make it easier to manufacture and use electric vehicles and EV-related aspects like charging stations. Many individuals are looking for more eco-friendly commute options and renting one is the ideal way to go. The government needs to take explicit steps to encourage people to buy more and more sustainable choices. Consumers will be able to get a taste of what it’s like to own an electric vehicle by renting one and then purchasing one at their leisure. With the Budget just around the corner, we will have to wait and watch if the developments/announcements will provide a boost to the industry.
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