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UNION BUDGET 2019-20 - Industry lauds EV boost

18/07/2019 | Author: Autoguide | 0 Comments Back To Home   < Previous News   |   Next news >

A mixed bag overall as expectations not fully met

The automobile industry was looking at this year’s Budget with a keen eye given the tough phase it has been going through. The sales slump, upcoming BS-VI emission norms, electric vehicle policy and GST were some of the areas which the industry wanted the Government to address. However, besides giving a big thrust to electric-driven mobility by proposing a slew of steps, the Finance Minister, Mrs Nirmala Sitharaman’s Budget has fallen short of expectations. The industry, of course, has lauded the measures to incentivise the manufacturing and sale of electric vehicles and the FM has got huge thumbs up for that, but overall, it finds the Budget a mixed bag. 
 
Herewith, we reproduce the edited version of automobile industry’s response to the Union Budget 2019-20 presented on July 5:  
 
 
Mr. Rajan Wadhera
President, SIAM
 
“We warmly welcome the various additional measures announced to promote EVs like reducing the GST to 5 per cent, exemption in customs duty on EV parts and specially the Income Tax deduction on the interest component paid for loans taken for purchasing EVs. All these were recommendations given by SIAM and we are grateful to the FM for having accepted them. These measures will certainly help in making EVs more affordable and attractive to the consumers.  
 
However, the auto industry is currently going through a very difficult time and it was expecting some form of a stimulus package in the Budget in line with what had been done by Government during the previous two similar slowdowns. It is disappointing that the FM has not recognised the distress in the auto sector and not come out with any kind of support or stimulus. However, the initiatives for improving liquidity in the market by capital infusion in the banks should help the industry to some extent.
 
Furthermore, the industry had expected that a voluntary scrappage policy would be announced which did not happen. There was also no announcement of extension of the 200 per cent weighted deduction for R&D expenses. 
 
In fact, increasing the duties on auto parts and putting an additional cess on petrol and diesel could drive up costs of vehicles, specially where volumes are low and localisation is not viable and the overall cost of operations of transport which could further aggravate the slowdown in the industry”
 
 
Mr Ram Venkataramani
President, ACMA
 
“The Budget is indeed futuristic and lays the foundation for India becoming a global economic powerhouse in the next few years. The industry welcomes the measures announced to improve liquidity in NBFCs. This will provide respite to the cash-crunch being faced by the industry as also help improve sales in the auto sector. 
 
We are also glad that the Government envisions making India a global hub for manufacturing of EVs. Reduction of GST from 12 per cent to 5 per cent and additional income tax deduction of Rs 1.5 lakh on interest paid on loans for purchase of EVs are steps in the right direction to make EVs affordable. Further, focus on mega manufacturing projects for semiconductors, photo-voltaic cells, Li-ion battery, etc. will facilitate localisation and spur manufacturing of EV components in India. 
 
The enhancement of duty on select items such as oil and air filters, glass, lighting, vehicular locks, horns, sound signal equipment, windscreen wipers, catalytic convertors etc. is welcome. This will not only provide impetus to the local manufacturing industry but also prevent sub-standard imports that adversely impact the domestic market, especially the aftermarket.”
 
 
Mr. Ashish Harsharaj Kale
President, FADA 
 
The Finance Minister has delivered a balanced Budget which will augur well for overall development and economic conditions as well as social inclusion of all citizens. For the auto sector, our Budget expectations were high looking at the current state of the industry. We were expecting specific measures to revive growth in the auto industry and to that extent we are disappointed. Moreover, an addition of cess on petrol and diesel might impact auto sales, especially in the price-sensitive two-wheeler segment
 
A spend of Rs 80,250 crore for upgradation of roads will definitely boost commercial vehicle sales and with better connectivity will have a rub-off effect on Overall rural auto sales in the Longer term. Focus on ensuring regular funding to sound NBFCs as well as allowing them similar treatment as allowed to banks for booking interest income will help in bringing down the current liquidity crisis.
 
In these trying times when auto sales are struggling, raising the limit of 25 per cent corporate tax from turnover of up to Rs 250 crore to up to Rs 400 crore will definitely boost sentiments towards doing business and benefit some of our members. Although, our demand of covering Partnerships and Proprietary Concerns was not met, we will continue to follow-up on the same. .
 
The focus on EV, the benefits announced in income tax rebate, the Intent to reduce GST on EV and the budget allotted to FAME-2 spells the strong intent of the Government in ensuring self-reliance on our country’s s energy needs and will benefit the nation in the longer term.
 
 
Mr Sohinder Gill
Director General, SMEV
 
“The announcements on electric vehicles in the Union Budget 2019-2020 bring cheers to both consumers as well as e-vehicle manufacturers. To make India as an EV manufacturing hub, decision on incentivising EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction. It will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector. Provision of additional income tax deduction of an amount up to Rs 1.5 lakh on purchase of EVs would encourage customers to opt for EVs.
 
Additionally, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale-up the business. The EV industry has witnessed 100 per cent growth in the FY 18-19, and with these key measures, we anticipate a brighter future ahead.” 
 
 
Dr Pawan Goenka
Managing Director, Mahindra & Mahindra
 
“As an industry, we could not have asked for more. The onus is now on us to make it work.”
 
 
Mr Shailesh Chandra
President, Electric Mobility Business, Tata Motors
 
“The incentives reinforce a strong commitment by the Government to steer electrification on a faster trajectory. The income tax rebate of Rs 1.5 lakh for EV buyers will encourage buyers in the personal mobility space to seriously consider EVs.”
 
 
Mr Naveen Munjal
Managing Director, Hero Electric
 
“The electric vehicle industry needed a substantial boost and support from the Government and we welcome the recommendation of reduction of GST on EVs from 12 per cent to 5 per cent. In addition to this, income tax reduction of up to Rs 1.5 lakh on the interest paid on EV loans is an extremely positive move which will encourage customers to make a switch from ICE vehicles to EVs. Reduction in custom duty on lithium-ion cells would help local component manufacturers in scaling up the production thereby further reducing the overall upfront cost of electric vehicles in India. The Government’s continued emphasis on FAME-II initiative and strengthening of EV infrastructure will definitely encourage manufacturers to further invest in the ecosystem thereby lowering both crude oil imports and air pollution leading to a cleaner and greener future.
 
 
Mr. Nirmal K Minda 
Chairman & MD, Minda Indusries
 
As a component manufacturer, we welcome the announcement made by the Government to encourage electric vehicle industry with a reduction in GST rate on EVs along with additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This will definitely provide an impetus to the EV manufacturing in the country, adding up to the Government’s vision of India as a global manufacturing hub for electric vehicles. 
 
The Government’s cherished EV project will also have a major ‘Make in India’ boost with the levy of custom duty on import of auto components and the relaxation of custom duty on lithium ion battery, which would help local manufacturers to supply affordable batteries and components to the OEMs. 
 
We also welcome the Government’s move to increase investment in infrastructure, job creation in SME & MSME, extending support towards start-ups, digital economy and urban and rural India, which will provide the right impetus in job creation and a new vision for India.”
 
 
Mr Naga Satyam
ED, Olectra Greentech 
 
“It’s more than what the EV industry has been expecting. There were doubts in the minds of investors about the intentions of the Government in terms of the EV industry. But the announcements made in the current year’s Budget must have definitely quelled their doubts. Also with this Budget, the Government has made it amply clear that EV manufacturing is the next big thing in its vision. Now, it is the responsibility of the industry to rise to the expectations of the Government and work towards more localisation.”
 
 
Mr. Sunil Gupta
MD & CEO, Avis India
 
“We are delighted with certain provisions made in the Budget as they underline the Government’s commitment to promoting EV adoption in India. The move to allow an additional tax deduction of Rs 1.5 lakh on loans taken for EV purchase, in particular, will incentivise more consumers to buy electric vehicles. Sustaining this momentum, however, will require a dedicated push to create a stronger EV support infrastructure on a pan-India level. We hope the Government will prioritise this aspect as it will be integral to bolstering the growth of the EV industry in the country." 
 
 
Mr Martin Schwenk
MD & CEO, Mercedes-Benz India
 
“We welcome the Government’s vision of achieving a $3-trillion economy and becoming the sixth largest economy in the world by the end of this year. However, the decision to increase the custom duty on automotive parts was not expected and it is not going to help create demand in the industry which already is facing continued strong macro-economic headwinds, resulting in subdued consumer interest. The increase in custom duty coupled with increased input costs due to fuel price hike could lead to an increase in the price of our model range. Though the Budget has given a boost to green mobility, we wished for the inclusion of plug-In-hybrids for duty exemption as well, as that would have further given a push to the green mobility efforts.”
 
 
Mr. Shekar Viswanathan
Vice Chairman & Whole-time Director – Toyota Kirloskar Motor
 
The focus of the 89th Union Budget has mostly been on connectivity and infrastructure emphasising on demand for connectivity across rural and urban markets. Infrastructure focus including those on road development, will lead to faster and more effective mobility solutions. This is positive news for the auto sector. Initiatives for improving liquidity in the market by capital infusion in the banks should also be of some help to the industry. Furthermore, the proposal of streamlining labour laws could lead to faster resolution of labour disputes.
 
We appreciate Government’s initiative to promote clean and green environment with special benefits to encourage electric vehicles (EV). EVs do bring the benefits towards fossil fuel conservation and lowering of carbon emissions. There are other forms of green mobility which will help the Government achieve the same objective. The Government should also align its taxation policies towards such green mobilities which promote reduction of fossil fuel and betterment of environment. 
 
 
Mr. Satyakam Arya
CEO & MD, Daimler India Commercial Vehicles 
 
”The Budget reiterated the importance of Infrastructure development in the country. We are happy to see the proposal to invest Rs 100 lakh crore in infrastructure over the next five years gives a great push to the development of the nation, complemented by initiatives such as Bharat Mala. This move not only will bridge the rural-urban divide but also have a positive impact on the commercial vehicle economy. In addition, the restructuring of the National Highway Programme is another welcome move that will create better national highways. 
 
We welcome the initiatives rolled out to stimulate rural market and MSMEs, which are the backbones of the India economy and are getting their much-needed attention. In addition, the capital infusion into banks will boost lending to NBFC and will put them in better health and this could help the CV industry. 
 
While we are pleased to see the emphasis and subsidies given to the development of the electric vehicles, a well-placed scrappage policy along with reduced GST rates would have been a welcome move and helped the auto economy to do better in a relatively slow year. The additional excise duty of Re 2/litre on petrol and diesel will amount to increased pressure for fleet operators.” 
 
 
Mr Deepak Arora
Joint Managing Director, JMA Group
 
With the BJP Government in power with a big majority, we were expecting a path-breaking Budget but it could have been a major event. Replacing the red suitcase with red bahi khata, although symbolic, shows India’s resolve to move much faster.  
 
On individual taxes, nothing significant has been done for middle class, which has limited scope of earning and paying taxes, except a few giveaways like in the housing sector. Yes, there are definitely lot of initiatives for economical backward class and the tax on super rich is also welcome. 
 
On corporate front, it is good that the income tax has been brought down to 25 per cent on the companies with a turnover of less than Rs 400 crore. Start-ups and MSMEs have been given a lot of impetus in form of soft loans and timely payment from the Government. 
 
Whereas many things have become online and direct interaction with concerned departments has reduced considerably, the ease-of doing business for companies of our size has really become difficult. The compliances have become very costly, cumbersome, complicated, multiple and above all hugely time-consuming; there is duplication of compliances and frequent changes in the Companies Act, almost weekly. If we want the country to grow at 8 per cent GDP, we definitely need much more simplified laws and many more qualified professionals who can take up these challenges and bring the unemployment numbers down.”  
 
 
Mr. Parveen Kharb
CEO and Co-Founder, 22KYMCO
 
“The Budget will catalyse India’s journey to electrification and will be beneficial for both, the e-mobility industry as well as consumers who are looking to make the shift to electric vehicles. The Budget has a strong synergy with the FAME-II scheme and the announcement will generate a positive sentiment. Lowering GST rates on electric vehicles to 5 per cent will make EVs more attractive to the buyer in the future. In addition, incentives on income tax will also increase the momentum for the sector. We welcome the new Budget and trust that this will encourage faster adoption of e-mobility in India.”
 
 
Mr Abhijeet Sinha
National Programme Director, EODB at ASSAR on E -Vehicles 
 
Income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase EVs will motivate EV buyers in big way and banks will aggressively step into EV financing. The GST rate reduction on electric vehicles from 12 per cent to 5 per cent will motivate manufacturers of electric vehicles.”  
 
 
Mr Sanjay Gupta
V-P and India Country Manager, NXP
 
“We welcome the Government’s move to lower the GST rate from 12 per cent to 5 per cent for purchase of electric vehicles and the vision to make India as the global manufacturing hub. The push for FAME-II by providing the right incentives can encourage a faster conversion rate. Semi-conductors and host of other components will be vital in developing the EV ecosystem in the country. Initiatives such as complete elimination of customs duty on some EV components could prove to be a game-changer for the auto-industry.” 
 
 
Mr. Sanjay Aggarwal
Managing Director, Fortum India
 
“The Union Budget clearly demonstrates the Government’s vision of putting India on a growth trajectory. Fortum India appreciates the various steps taken by the Government in addressing the issues related to tax and duties in the renewable sector and electric mobility. The reduction in GST and import duties will accelerate the deployment and usage of electric vehicles in India. We now see a lot of action in the electric mobility, charging and storage space in line with the Government’s green vision, which is very encouraging for the industry.”
 
 
Mr Amit Raj Singh
Co-Founder, Gemopai Electric 
 
"The Union Budget has announced catalysts for growth of the electric vehicles industry. The Government’s statement of purpose for making India become global hub of manufacturing EVs is welcome. The much-needed reduction in the customs duty for components in EVs to 5 per cent will help ship in greener technologies and vehicles to the country. We also laud the reduction in GST on electric vehicles from 12 per cent to 5 per cent. It will make the transportation of future more affordable for consumers.” 
 
 
Mr Rajeev Singh
Partner, Deloitte India
 
“Slashing of corporate tax from 30 per cent to 25 per cent for companies up to a turnover of Rs 400 crore will help a large number of MSME players supplying components the auto industry as well as small dealers associated with the auto sector.”
 
 
Mr Nishant Arya
Executive Director, JBM Group 
 
“We welcome the measures announced in the Budget aimed towards promoting and faster deployment of EVs. The reduction of GST on EV's from 12 per cent to 5 per cent, exemption in customs duty on EV parts and additional income tax reduction of Rs 1.5 lakh on the interest paid on the loan to purchase these vehicles is a big push to make EVs affordable for the consumers. Additionally, the Government’s approval of Rs 10,000 crore for FAME-II in April this year is in line with its aim of making India the manufacturing hub for EVs and will be a great booster for the industry."
 
 
Mr Raghav Belavadi
Founder & CEO, HYPE
 
“This Budget is indeed a welcome move from the Government. It provides the right impetus for thousands of startups in India and will prove to be a decisive game-changer for the ecosystem. The institutionalizing of a TV-programme on start-ups will be a disruptor and help in chronicling the journey and building a ready repository with great learning for others. Additionally, we are exhilarated at the positive changes that have been augured across labour laws, education and rental housing that will have a direct impact on startups. The Government’s ongoing focus on promoting EVs and cleaner mobility solutions is in sync with incentives for EV start-ups in the country. We congratulate the Government for taking the onus of proposing a host of enhancements to the digital payment systems ecosystem.” 
 
 
Mr Ajay Shankar
Distinguished Fellow, TERI
 
“The Union Budget demonstrates the Government’s vision of putting India on the path to sustainable development and takes forward the Government’s commitment to cleaner environment as was highlighted in the interim Budget. It is good to note that ‘control of pollution’ has appeared as a head in the Budget. A good beginning has been made. Further efforts and adequate funds are needed to crystallise and implement mitigation measures. The electric mobility sector has been given a booster in terms of tax benefits. This will accelerate the deployment and usage of electric vehicles in India, resulting in cleaner air and greater usage of renewable energy.” 
 
 
Mr. V. Anbu
Secretary, Director General & CEO, IMTMA
 
The Union Budget is significant for manufacturing sector as well as the machine tool industry. As the first-ever Budget presented by a full-time woman Finance Minister in India, it looks a promising one to arrest downturn and steer the country’s economy in the right direction. The lower 25 per cent corporate tax on companies with turnover of up to Rs 400 crore is expected to boost investments. It is a positive step towards development of MSME sector and enhancing their production capacities. Machine tool industry is the backbone of MSMEs and this bodes well for machine tool manufacturers.” 
 
 
Mr Rohit Saboo
CEO & MD, National Engineering Industries  
 
“Infrastructure development has always been prerequisite for growth, which has been taken well into consideration in this year’s Union Budget. The Government’s strong focus on boosting infrastructure and connectivity, with an investment of Rs 80,250 crore for Phase-3 of the Pradhan Mantri Gram Sadak Yojana, will bring positive sentiments for the sector by increasing demand for transport. These measures will surely lead to improved sales of automotive products, especially two-wheelers, farm equipment and entry-level passenger vehicles which in turn, will fuel the growth of the auto components industry.” 
 
 
 
 
 

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