Union Budget 2017: Arun Jaitley boost to infrastructure spending will power up auto sector

New Delhi | Published: February 2, 2017 6:08:38 AM

We welcome the Union Budget 2017-18, as it is mainly focused on spending on rural sector, agriculture and infrastructure, which is expected to create jobs.

Continued focus on infrastructure would be a positive for the auto industry.Continued focus on infrastructure would be a positive for the auto industry.

We welcome the Union Budget 2017-18, as it is mainly focused on spending on rural sector, agriculture and infrastructure, which is expected to create jobs. While reduction in interest rates has already given an impetus to the consumption cycle, lower personal income tax for income up to R5 lakh will put more money in the hands of the common man. Reduction in individual tax rates in the R2.5 lakh to R5 lakh category can boost commuter segment demand in the two-wheeler sector. With measures to stimulate growth, promote the digital economy and provide relief to the middle-class through affordable housing, this Budget ticks all the right boxes.

Continued focus on infrastructure would be a positive for the auto industry. The increase in Budget allocation for roads and highways, and investments on rural roads, is a positive sentiment-builder for the industry. The rural consumer preference is expected to shift automatic scooters over motorcycles when the road construction index is high in any state. We are confident the improvement in infrastructure will benefit in the penetration of scooters in the country even further.

Industry leaders are happy that no change was made to the service tax rate and, hence, there is no increase in the cost of after-sales services and insurance for two-wheelers.

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GST implementation scheduled announcement is positive for the auto sector on the whole. In the automobile industry, entry-level two-wheelers derive 50% of the total demand from the rural market, and the impact of demonetisation was felt the maximum in the rural segment. This year’s Union Budget has firm thrust on rural and agro-economy through farm credit, rural infrastructure, poverty alleviation, road construction and direct taxation benefits.

YS Guleria, Senior Vice-President, Sales & Marketing, Honda Motorcycle & Scooter India            

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