The automotive industry in India, which is the world’s largest two-wheeler market and third-largest car market, is also one of the key contributors to the country’s GDP. As part of Budget 2023, the government has reiterated its focus on capital expenditure as well as vehicle scrappage policy along with a reduction in customs duty for electric vehicle components that will provide a cascading effect on new vehicle sales.
Dr Raghupati Singhania, Chairman & MD, JK Tyre & Industries said that Indian economy, which is estimated to grow at 7 percent for FY2023 shows we are on the right track to become the third largest economy. The Finance Minister in her budget speech laid emphasis on infrastructure development, technology, sustainability and inclusive growth which is praiseworthy. Reduction in custom duties and replacing older, polluting vehicles will catapult adoption of green mobility and help in achieving sustainability targets.”
He further appreciated the government’s move to increase of 33% in capital expenditure on roads, railways and airports among others which will create a multiplier effect including rise in raw materials consumption, creation of jobs, infrastructure development and boost in investments. Dr Singhania welcomed the much-needed policy push for skilling and upskilling youth will make them job-ready and prepare them for future.
Satyakam Arya, MD & CEO, Daimler India Commercial Vehicles said the 33% increase in CAPEX outlay shows that the Budget has been pro-growth and the increase is to step up on the 7% growth achieved in the previous fiscal.
The highlight of the budget for commercial vehicles OEMs was the eye on digitalisation by leveraging 5G, which will optimise costs and improve efficiency in the sectors as it gets implemented. The Rs 19,500 crore outlay for green hydrogen development is a step in the right direction for the future of heavy-duty trucks and largely, the logistics industry; Rs 35,000 crore for renewable energy transition projects is also an interesting initiative but how this pans out in the medium term will mark its significance.
“The PM Awas Yojana that is planned for boosting rural housing would create more jobs and bring more projects for the CV industry. We also feel that the concept of the Green Credit program can be beneficial if thought through and implemented well. Our overall view of the FY 2024 budget is that it is expansive and pragmatic. The budget clearly indicates a penchant for sustainable growth with a potential of aligning with long-term objectives. While the infrastructure push is a fiscal multiplier, it also gives the CV industry plenty of projects to look out for in the medium term.”
“However, we were also expecting more on the National Logistics Policy, its strategy which was drafted exceptionally and we were eager to see it get implemented or at least have an outlay. A more specific mention on the continuity of the Scrappage Policy would have given a direction to the industry, not just for preparing to replace phased out vehicles with new ones but to encourage the proliferation of scrappage companies to expand their businesses,” added Arya.
Narinder Mittal, MD, CNH Industrial India & SAARC – Agriculture Division said the record-high agriculture credit of Rs 20 lakh crore would enable Indian farmers to increase their output with the assistance of smart machines and techniques. The target’s five-fold expansion will further enhance demand for cutting-edge farm machinery and crop management solutions to meet the rising demand for Indian grains globally. Additionally, it will assist the farmers in recovering from their loss as a result of the change in climatic conditions.
“The emphasis on making India a hub for ‘Shree Anna’ (Millet) will promote greater reforms and the home farming business in the coming years. Furthermore, numerous investments are being made in clean and green farming, along with the efforts to decentralise storage capacity enabling farmers to store their produce and earn remuneration at the right time.”
Manish Bhatnagar, MD, SKF India added that “The budget is progressive and growth-oriented given the focus on capital expenditure, green mobility, clean energy, and agriculture. It further defines the roadmap for achieving net-zero emissions by 2070. Further, the budget will also help the Indian economy reap benefits from local manufacturing, infrastructure development, and technology advancements and will firmly position the country on the path to accelerated growth.”
Hitesh Garg, India Country Manager, NXP Semiconductors stated that the government has brought a progressive budget that will support green mobility and innovation in the automobile sector. Major steps like National Green Hydrogen Mission and extending the subsidy on EV batteries would further help the country to have a seamless transition towards a low carbon intensive and fossil fuel dependent economy, empowering the country to achieve its net zero goals.
“The three centres of excellence for Artificial Intelligence (AI) to enable ‘Make AI for India’ and ‘Make AI work for India’ will stimulate an effective AI ecosystem and nurture quality human resources in the field of technology. It will also boost the Public-Private Partnership (PPP) in conducting research and developing cutting-edge applications and scalable solutions across industries.”
S. Sunil Kumar, President, Henkel India lauded the Finance Minister’s 7 priorities, which include inclusive development, green growth, youth power, financial sector, and last-mile infrastructure. “The strong continuity for capital expenditure investment programs into roads, railways, ports, airports will have a strong growth multiplier impact and ensure a higher rate of employment. The simplified tax structure and the raising of the tax exemption slabs are welcome as it puts more money in the hands of the consumer. We also appreciate the reduction in basic custom duty rates on goods other than textiles and agriculture, from 21% to 13%.”
Suresh KV, President & Region Head, ZF India said that the budget highlights significant positive initiatives for the automobile industry through a slew of announcements supporting state government and municipalities in scrapping pollution-causing vehicles. The scheme makes way for faster electric vehicle adoption and helps transition to cleaner mobility in the long run. Along with that, the prioritisation of green growth will aid all energy-generating sectors – wind, hydro and solar. The national green hydrogen mission, which was recently launched with an investment of Rs 19,700 crore will help the economy transition to low carbon intensity and reduce reliance on fossil fuel imports which would help guide the industry’s services toward smart logistics of the future. The increased outlay for infrastructure will also assist the transportation sector as a whole with a positive effect on logistics, light vehicles, industrial vehicles and commercial vehicles.”
Amitabh Mathur, President and MD, Aptiv India & ASEAN said that overall the 2023 Union Budget has been a very positive and progressive one with a promise of accelerated growth in the EV sector. “Announcing some much-needed relief for the EV sector in the form of a Customs Duty reduction from 21% to 13% on lithium batteries and an extension of the subsidies on EV batteries for one more year, the government has reiterated its commitment to creating a sustainable economy.”
Sunil Puri, MD – India & SAARC Operations, CASE Construction Equipment said the bolstering of infrastructure development are among the seven priority areas in the union budget’s proposal. “With 50 new airports being targeted, Rs 2.7 lakh crore being allocated for road infrastructure and Rs 2.4 lakh crore for railways, the government is placing the right onus on infrastructure development, as it has in recent years. We are also enthused by the announcement of an urban infrastructure development fund and the opportunities presented for private investment in infrastructure through newly established Infrastructure Finance Secretariat.”