Budget 2017: 7 positives for the auto industry

Budget 2017 positives for auto industry
A lowdown on the budget aspects that the FM rolled out today

FM Arun Jaitley presented the budget today, way earlier than usual as the government intends to implement all the policies by the end of 2017 itself.
Here are some of the important aspects that we believe would affect the auto industry:

1. India is now the 6th largest manufacturing hub in the world, as compared to the 9th position it held last year. Maruti Suzuki, Ford India and Hyundai Motors India Limited export their vehicles all over the globe, including the European Union. The manufacturing facilities are world class and cater to even developed countries.

2. Demonetisation affected the sales of vehicles all over the country but January saw Maruti Suzuki achieving the best numbers in the last 52 weeks! Even Toyota India achieved a growth of over 21 per cent, YoY.

3. The budget is largely focused on rural infrastructure development. Even the tax regime has been implemented taking into account the middle and lower classes. The rural sectors are thus expected to be the most fruitful for auto manufacturers in the coming year. The sales of utility vehicles as well as entry level cars are expected to be boosted. Even commuter two wheeler segment should do well.

4. Under the Pradhan Mantri Gram Sadak Yojna, an average of 130km of roads are expected to be constructed each day in 2017-18 as compared to 73km between 2011 to 2014. Expect the logistical costs to go down, thus lowering the prices overall. And what better for us enthusiasts than to have more roads to explore, isn’t it?

5. Synchronised investment in logistical methods including railways and waterways is expected to lower the supply chain operational costs and also reduce the mobility period. So, expect your new vehicle to be delivered to you quicker than usual.

6. Multimodal transport infrastructure, combined with the implementation of GST should be an idealistic procedure for the road logistics industry. Even the new FDI policy shall allow for higher capital inflows. Expect more international players to setup manufacturing plants across the country.

7. Cash transactions are now capped at Rs. 3 lakh, which will affect the luxury car and premium bike segment to a large extent. But it also means that the booking amount will be reduced significantly!

Have we missed out on anything? Let us know by writing in the comments sections below.

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Abhishek Wairagade

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