The country’s budget for the financial year of 2019-20 is revealed. This new India Budget will give us insight as to how the automobile industry will be affected this year.
EVs get an upper hand while imported Multi-Seaters suffer:
Right of the bat, purchase of electric vehicles will get a lot easier. The government is pushing towards electric vehicles being the future of mobility. Finance Minister Nirmala Sitharaman proposes an income tax deduction of Rs 1.5 lakh on the interest paid on loan taken to buy EVs. Also, GST on electric vehicles reduces from 12% to 5%. This totals up to a saving of around Rs 2.5 lakh on EVs. We also know that the government has already approved Rs 10,000 crore for FAME II scheme.
Fully imported vehicles will take a hit according to the new India Budget scheme. Fully importer multi-seater vehicles will see a rise in customs duty from 25% to 30%. This is only for vehicles which can seat more than 10 people.
The government also ignored the request of the Society of Indian Automobile Manufacturers (SIAM) to drop GST from 28% to 18%. Manufacturers believe the high GST is leading to a decrease in growth of the automobile sector.
Some reactions to the new India Budget announcements:
Mr. Rajeev Kapur, MD, Steelbird Helmets & President, Two Wheeler Helmet Manufacturers Association welcomes the move of the Government to reduce corporate tax by 5% for companies having a turn over of up to 400 crores. He believes this will create extra space for midsize companies to invest more in research, development & capacity creation.
Mr. Shailesh Chandra, President – Electric Mobility Business and Corporate Strategy, Tata Motors Ltd. believes the incentives offered with respect to the EVs reinforces a strong commitment by the government to steer electrification on a faster trajectory. He also says lowering the GST rate for EVs and EV components will help in further narrowing down the cost of ownership.
Mr. Shekar Viswanathan, Vice Chairman & Whole-time Director – Toyota Kirloskar Motor applauds the emphasis on the demand for connectivity across rural and urban markets. Infrastructure focus including those on road development will lead to faster and more effective mobility solutions. He also appreciates the government’s initiative to promote a clean & green environment with special benefits to encourage EVs.
Others like Revolt Intellicorp Pvt. Ltd., ACMA, Olectra Greentech, SMEV, Okinawa Autotech Pvt. Ltd. and other major bodies in the EV sector also appreciate the move taken by the government.