Auto industry rues lack of measures in Budget to help it come out of slowdown

The automobile industry Friday rued the lack of policy initiatives in the Budget to help the sector wriggle out of a prolonged slowdown.

The industry, while welcoming government's push to promote electric vehicles through various policy measures, also sought similar kind of incentives for other green technologies.

Apex industry body Society of Indian Automobile Manufacturers (SIAM) said the sector has been going through a very difficult time and the industry was expecting some form of a stimulus package in the Budget in line with what had been done by the government during the previous two similar slowdowns.

"It is disappointing that the Finance Minister has not recognised the distress in the auto sector and not come out with any kind of support or stimulus," SIAM President Rajan Wadhera said in a statement.

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. The overall cost of operations of transport could further aggravate the slowdown in the industry, he added.

Furthermore, the industry had expected that a voluntary scrappage policy would be announced which did not happen. Also, there was no announcement of extension of the 200 per cent weighted deduction for research and development expenses, Wadhera said.

However, initiatives for improving liquidity in the market by capital infusion in banks should help the industry to some extent, he added.

Toyota Kirloskar Motor Vice Chairman and Whole-time Director Shekar Viswanathan, while appreciating initiatives to promote clean environment with special benefits to encourage electric vehicles (EV), said there are other forms of green mobility which also help 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," he added.

Similarly, Mercedes-Benz India Managing Director and CEO Martin Schwenk said, "Though the budget has given a boost to green mobility, we wished for the inclusion of plug-in hybrids for duty exemption too, as that would have further given a push to the green mobility efforts."
Mahindra Group Chairman Anand Mahindra said in a tweet, "Instead of lowering GST on all cars, she (FM) aligned with the vision for mobility, and incentivised only EVs."
Welcoming the Budget proposals to promote electric mobility, SIAM's Wadhera said, "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."