The boost to consumption stemming directly from the proposed revision in personal income tax and from indirect measures such as the increase in infrastructure capex and scrappage of old vehicles will likely benefit the automobile, consumer goods and consumer durable segments.
Rajesh Jejurikar, ED (auto and farm sectors), Mahindra & Mahindra, said the Budget has struck the right balance between growth and fiscal prudence. “The reduction in income tax will put more money in the hands of consumers, driving consumption and growth in the economy,” he said.
The auto industry is expected to grow at a CAGR of 7% over the next few years, thanks to factors such as rising disposable income, strong demand for cars and trucks accruing from increasing government focus on infrastructure development. The scrapping of old central and state governments vehicles will definitely generate demand for new vehicles. The move will benefit both listed automakers such as Maruti Suzuki, Tata Motors and M&M as well as other passenger carmakers like Hyundai, Honda Motors and Toyota Kirloskar, among others.
Also read: Share market unimpressed with Budget 2023, eyes US Fed meet for cues; what should investors do?
Shashank Srivastava, senior executive officer, (marketing and sales), Maruti Suzuki India, said the proposed changes in the new personal income tax regime as well as the announcements regarding capex will help generate demand in the short term and generate capacity in the medium to long term. “Investment in areas such as railways, increased agricultural credit target, policies on scrappage and encouragement of bio-fuel will all have a positive impact,” he said.
“Announcements related to vehicle replacement and customs duty exemption for the manufacture of lithium-ion batteries will pave the future road map for the Indian auto industry,” said a senior Hyundai Motors India official.
According to Manish Raj Singhania, president, FADA, the capital outlay of `10 trillion in infrastructure spending will definitely aid commercial vehicle sales. Tata Motors and Ashok Leyland will be the prime beneficiaries.
With more money in the hands of consumers, the entry-level two-wheeler segment can also look forward to better days ahead.
Industry observers say the focus on electrification and the proposed relaxation of import duties of lithium-ion batteries will help make EVs affordable for the masses. “It will lead to faster adoption of EVs and further aid the development of an efficient EV ecosystem,” said Jeetender Sharma, founder and MD, Okinawa Autotech.
Also read: Railways Budget: More Vande Bharat Express productions, Hydrogen-Powered trains to roll out by December, says Ashwini Vaishnaw
Consumer durables companies, too, stand to gain. “We expect this move to encourage investment and boost overall economic growth of the country,” said Satish NS, president, Haier Appliances India.