Reactions to the Budget: What auto industry bigwigs have to say
The Finance Minister Arun Jaitley announced the budget in India and it had a lot to with allocating funds in rural sectors, agriculture and building infrastructure. We analysed some of the highlights of the budget in our story yesterday. Here are some things that the automotive industry had to say about the upcoming year—
Here is what Ravi Avalur, Managing Director, Ducati India said about the focus on infrastructure, “Transport infrastructure plays a pivotal role in the growth of the economy and we appreciate the government’s decision to further develop this infrastructure in India and enhance road safety. Be that as it may, Ducati also manufactures Adventure and Enduro style motorcycles that don’t require sophisticated transport infrastructure. We are already working with leading adventure tour operators and we hope to promote motorcycle tourism in particular which should fit well into the Government’s renewed efforts in this Budget to promote tourism in general.”
Meanwhile, Mr. Roland Folger, MD & CEO, Mercedes-Benz India said, “By allocating a greater amount to transportation, airports and highways, the focus will be greater on infrastructural development. This will help the auto sector’s growth during the long-term. The total allocation for rural, agricultural and allied sectors is Rs 1,87,223 crore, up 24% from last year, which is hugely positive.”
The budget largely ignored the automotive sphere as the impending GST regime which will be implemented in July 2017 should bring about the necessary changes in tax structures and give a boost to the auto segment. Picking up on this, Folger continued,“The Finance Minister has hailed the clearance of GST related constitutional amendment bill and implementation of demonetisation as Tectonic policy initiatives. Even though no major indirect tax related changes have been made in the budget on account of the ensuing GST regime, Mercedes-Benz is hopeful that the government will take necessary steps to spur the growth of the luxury car industry, and help bring down the price of luxury cars. We hope GST will help recover the momentum that the auto industry in general, and luxury car industry in particular, lost in 2016.”
Even Mr. Ayush Lohia, CEO, Lohia Auto Industries resonated the same thing saying,“Considering the unfavourable environment for the auto industry on the whole due to demonetization we had all pine highest ever hope with the union budget. The good news for the sector is that the GST will go as scheduled as the government has taken two tectonic policy initiatives — passage of GST Bill and demonetisation. GST implementation is positive for the auto sector on the whole. We are certain that positive sentiments will be restored as it bears good tidings for Electric Vehicle industry and the sector overall.”
However, the electric vehicle and hybrid vehicle sector seems to have been largely ignored in this budget. The FAME (Faster Adoption and Manufacturing of Hybrid and Electric vehicles) scheme was to be reviewed on March 31, 2017 and funds were to be allocated for the future, however nothing of the sort was mentioned in the budget.
Mr. Tom von Bonsdorff, Managing Director, Volvo Auto India said,“The Union Budget measures to incentivise and promote infrastructure augurs well for the economy and the auto sector. The focus on boosting of rural demand is also encouraging. While it was anticipated that there won’t be any major changes in existing indirect taxes in this Budget in view of impending GST implementation, any measures to promote green technology would have given customers more options of environment friendly vehicles.”
Guillaume Sicard, President, Nissan India Operations said,“However, there is nothing substantial for R&D for automotive industry, EV and Hybrid vehicles, which is a dampener. We look forward to the implementation of GST for the automotive sector in the months to come to offer the much needed stimulus to the auto industry and encourage buyer sentiment and consumer confidence. ” However, he did find the changes in income tax regulations for people earning less than 5 lakhs per annum to be a positive step. He said,“This will create a positive sentiment among likely first time buyers for entry level and small cars.”
But it isn’t just about cars and bikes sold to the general populous that was affected by the budget. The boost to infrastructure development meant earthmover like JCB would get a boost. Vipin Sondhi, Managing Director & CEO, JCB India Ltd said, “From earthmoving and construction equipment industry’s perspective, we till now witnessed that the roads and highway sector leading the growth momentum, however to really create sustainable growth, other sectors needed attention. With this budget the focus has broadened and now includes sectors like railways, agriculture and real estate with emphasis on affordable housing. A record investment of Rs. 3,96,135 crore for infrastructure, 1.31 lakh crore for railways is a big boost to the economy and a step in the right direction. Thrust on agriculture sector with credit set at Rs. 10 lakh crore will aid country’s all round development. Broadly, the current budget will open up more avenues for further industrial proliferation and surely augurs well for the earthmoving and construction equipment industry.”
