Even as you’re reading this, Finance Minister Nirmala Sitharaman is presenting the 2019 Union Budget in India’s parliament. The auto industry, which is reeling from a slowdown in sales is expecting a few sops from the government in order to kick start demand. The Indian government is betting big on vehicle electrification across segments, and is expected to announce a slew of tax cuts to incentivise the manufacture and purchase of electric vehicles. Keep watching this space for more updates.i
The key expectations from this budget from the auto industry in India includes a cut in Goods and Sales Tax (GST) on both vehicles as well as auto components. SIAM, a lobbying body for the Indian auto industry, has urged the government to reduce GST on cars measuring over 4 meters in length (from 28 % to 18 &). As for the auto component sector, ACMA – a lobbying body – has urged the government to reduce GST on vehicle parts from 28 % to 18 %. The body has also asked for reduction in customs duty on raw materials such as steel and aluminium.
- Nirmala Sitharaman, in her budget speech, has noted that an outlay of Rs 10,000 crore had been approved on 1 April 2019 to encourage faster adoption of electric vehicles.
- Loans taken on electric cars to get income tax rebates. Electric car buyers will save up to Rs. 2.5 lakhs (in interest benefit through the tax break) if they opt for a loan.
- Government recommends reduction in GST on electric vehicles, from the current 12 % to 5 %. So, electric vehicles are likely to get cheaper to buy as well.
- Fuel prices to increase as there is a 1 rupee cess per liter on both petrol and diesel.
Beyond these announcements, the latest budget had no other proposals that would directly affect the auto industry and the car/two wheeler owner in India. Most of the demands from the auto industry have not been addressed in this budget, and the sales slowdown that the industry has been going through is likely to persist till the economy turns around.