Budget 2017 wishlist: Expectations from the automobile sector

Industry is providing direct and indirect employment to 29 mn people, says Siam

Industry Size
All categories: 23.9 mn units (including two-wheelers, passenger vehicles, Commercial vehicles, three-wheelers) (according to Siam)

Employment figure
Industry is providing direct and indirect employment to 29 mn people (according to Siam) 

Contribution to GDP
7.1% to GDP (Siam)

 

Key issues of concern for the automobile sector

Taxes: Industry is subject to a multiple taxes. These have a cascading effect and end up constituting a substantial part of the overall cost structure of a vehicle  

Demand fluctuations: On account of various macro-economic factors, the industry has seen fluctuating demand in the domestic market. This has impacted the industry growth in the short term 

Industry Demands

1.Introduce incentives for scrappage of old cars

2.The proposed GST legislation, from July 1, is expected to rationalise and simplify the tax structure for the automobile industry, inter alia, by subsuming multiple levies and rationalising tax rates. The tax structure proposed in the Budget should ideally be a precursor to the forthcoming GST tax structure, enabling the industry with adequate time to prepare itself

3.A Budget which focuses on boosting rural consumption, demand and lower interest rates, would augur well

PwC point of view

Dinesh Supekar, Partner Price Waterhouse, also an auto expert
1. The automobile industry is one of the most heavily taxed industries in India. The GST regime is expected to subsume multiple taxes and have a simpler tax structure vis-a-vis the present one. The Union Budget should ideally be a precursor to such a simplified tax regime

2.A well regulated incentive scheme for scrappage of old cars would undoubtedly have certain benefits. However, a careful evaluation needs to be done prior to introduction. The Budget should overall seek to announce tax measures and policies which boost the consumption in the economy and facilitate a low interest rate regime. This would certainly have a positive impact on the industry
 

Read full transcript of webchat with Dinesh Supekar

YK Koo, MD & CEO, Hyundai Motor India
“The automobile Industry has been facing multiple challenges and is adversely impacted, resulting lower customer sentiment. To steer the growth, we are looking forward to positive initiatives on ease of doing business from Union Budget 2017-18. Reduction in excise duty rates towards timely GST mplementation along with lower corporate and income tax will benefit the industry. The new uniform tax structure will create a robust business environment and help the industry to positively contribute for National GDP”