The Auto Industry Reacts To The Union Budget 2019
The Industry reacts to the Nirmala Sitharaman’s first budget and praises the Government's move towards green mobility solutions.
This is clear from the budget that the Government wants to move towards electric mobility solutions. The eye of government was pointed towards electric vehicles in budget 2019. There are lots of incentives that are promised for the Electric Vehicle industry in this budget. To know more on it: Click here
Here are some reactions of Industry experts on Union Budget 2019 :
Rajeev Singh, Partner, Deloitte India
“Slashing of Corporate tax from 30% to 25% for companies up to a turnover of 400 crore will help a large number of MSME players supplying components into the Auto industry as well as small dealers associated with the auto sector.”
Kavan Mukhtyar, Partner & Leader - Automotive, PwC India
The Indian automotive industry, reeling under the pressure of demand slowdown, was expecting some short-term measures for demand activation. However the Government has chosen to instead focus on structural changes that will benefit the automotive industry in the long-term.
Mr. Prayesh Jain, Executive Vice President
EV Focus: Prudent steps, more needs to be done. While the incentives provided (IT deduction for individuals on interest on loans taken for purchase of EV, lowering import duties on parts) in the budget for purchase of EVs along with FAME 2 measures would narrow down the cost difference between EVs and ICE vehicles, the key impediments for EV proliferation is the lack of charging infrastructure and availability of products with adequate charging range at affordable prices. We still believe that EV story in India is for the longer term.
Mr. N K Minda, Chairman & Managing Director, UNO Minda
"The Government’s cherished EV project will also have a major ‘Make in India’ boost with the levy of customs duty on import of Auto Components and the relaxation of custom duty on a lithium-ion battery, which would help local manufacturers to supply affordable batteries & components to the OEMs.
We also welcome the government’s move to increase investment in Infrastructure, Job Creation in SME & MSME, extending support towards start-ups, digital economy and urban & rural India, which will provide the right impetus in job creation and a new vision for India.”
Martin Schwenk, Managing Director & CEO, Mercedes-Benz India
“We welcome the Government’s vision of achieving a 3 trillion dollar economy and becoming the 6th largest economy in the world by end of this year. However, the decision to increase the custom duty on automotive parts was not expected and it is not going to help create demand in the industry which already is facing continued strong macro-economic headwinds, resulting in subdued consumer interest. The increase in custom duty coupled with increased input costs due to fuel price hike, could lead to an increase in the price of our model range. Though the budget has given a boost to green mobility, we wished for the inclusion of Plug-In-Hybrids for duty exemption as well, as that would have further given a push to the green mobility efforts.”
Vivekananda H.R., CEO, and Co-Founder, Bounce
The continued focus on EV adoption through FAME II, provision towards charging infrastructure, reduction of GST and IT deduction will be a game changer. This budget is a boost for mobility players like Bounce to make stronger and faster inroads into EV
Mr. Goldie Srivastava, Co-Founder, and CEO, SmartE
The directive to the GST council to lower the GST rate on electric vehicles (EV) from 12% to 5% will be immensely beneficial to the overall industry and will certainly help spur the adoption of EVs. Moreover, the additional income tax deduction of Rs 1.5 lakh on the interest paid on loans to purchase EVs will boost consumer confidence leading to higher adoption. We echo the Government's vision to make India a hub for EV manufacturing and SmartE will continue to play an integral role in the development of the sector.
Paritosh Dey, Co-Founder & CEO, Benling India Energy and Technology Pvt Ltd.
Govt's mission of bringing an Electric Vehicle (EV) revolution to India is truly path-breaking and will surely provide the much-needed impetus to the industry. In line with its road map for EVs in the next four years, the budget offers upfront incentives on the purchase of EVs. We welcome the Government’s vision to protect the environment and lead the energy revolution with EVs in the coming years.
Tarun Mehta, CEO, Cofounder, Ather Energy
The Government has already moved GST Council to lower GST on EVs from 12 percent to 5 percent and the additional income tax reduction is a major boost for end consumers to purchase EVs. It addresses the concern of the upfront cost of purchasing electric vehicles. This is the best example of a consumer-driven change and is also how Ather envisions the EV sector to achieve scale and growth. It now becomes imperative that OEMs chalk out plans that allow the industry to scale up and meet the demand for compelling products.
Mr. Nishchal Chaudhary, Founder & CEO- BattRE electric mobility Pvt LTD
I think the budget has clearly indicated the positive intent of the government in pushing the e-mobility revolution in India. The question of when is not that important as the how. The ‘how’ is now getting addressed. Consumer adoption of this technology not only requires education and mind-shift but also an attractive and feasible overall proposition. I think with the govt proposing lowering of GST and providing a deduction of tax on interest on loans, the outlay for infrastructure for battery charging stations, push towards making in India initiative is just the kick start measures required.
Kapil Shelke, Tork Motors
This is a positive sign for start-ups like us who will soon begin selling electric motorcycles. The end cost for the customer will reduce.
Mr Rajeev Kapur, Managing Director, Steelbird Helmets
welcomes the move of the Government to reduce corporate tax by 5% for companies having turn over up to 400cr was a long pending reform and I am sure this will create extra space for midsize companies to invest more into research, development & capacity creation. Besides, the focus area of E-vehicles will also help the auto sector to transform rapidly and create a level playing field for new innovation in mobility.
In the budget, Government has shown it’s intent on two another key areas that are strengthening rural roads & national highways which is a step worth applauding as it will lead to the better conditions and a better network of roads significantly reduce the fatal accidents, reduce the health care burden and improve the overall connectivity
Mr. Ayyushman Mehta, MD, Mavox Helmets, Sandhar Amkin Industries Pvt. Ltd.
NDA 2.0’s first budget is a welcome move for electric vehicles and this budget justifies the importance of electric vehicles towards a cleaner nation. The government also proposed the construction of rural roads and highways which too is a significant move to ensure better safety of the people on the roads. We expected lower GST rates on helmets as they are a safety product required by all Indian two wheeler riders. To fulfill the dream of only ISI helmets to be allowed on Indian roads, lower GST rates would have contributed towards building a safe and secure rider on the Indian streets.
Mr. Sunil Gupta, MD & CEO, Avis India
The move to allow an additional tax deduction of INR 1.5 lakh on loans taken for EV purchase, in particular, will incentivize more Indian consumers to buy electric vehicles. Sustaining this momentum, however, will require a dedicated push to create a stronger EV support infrastructure on a pan-India level. We hope that the government will prioritize this aspect, as it will be integral to bolstering the growth of the country’s EV industry and will also help in drastically reducing carbon emission and air pollution levels
Mr Nishant Arya, Executive Director, JBM Group
We welcome the measures announced in the budget aimed towards promoting and faster deployment of EVs. The reduction of GST on EV's from 12% to 5%, exemption in customs duty on EV parts and additional income tax reduction of Rs 1.5 lakh on the interest paid on the loan to purchase these vehicles is a big push to make EVs affordable for the consumers. Additionally, the government’s approval of Rs 10,000 crore for the FAME II scheme in April this year is in line with their aim to make India the manufacturing hub for EVs and will be a great booster for the industry
Mr Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV)
To make India as an EV manufacturing hub, decision on incentivizing EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction. It will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector.
Additionally, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale-up the business. The EV industry has witnessed 100% growth in the FY 18-19, and with these key measures announced today, we anticipate a brighter future ahead for the industry.
Mr Ayush Lohia CEO Lohia Auto
It’s a welcome move that the Government has reduced GST on electric vehicles from 12% to 5% & also allocated Rs 10,000 crore for faster adoption of electric vehicles and has announced upfront incentives for electric vehicles. This will help attract investment for manufacturers and to ensure clean energy over time. This decision will represent the next generation in sustainable mobility & make them an attractive alternative to consumers.
Naga Satyam, Executive Director, Olectra Greentech, manufacturer of Electric Buses
“It’s more than what the EV industry has been expecting. There were doubts in the minds of investors about the intentions of the Government in terms of the EV industry. But the announcements made in the current year’s budget must have definitely quelled their doubts.
Also, with this budget Government has made it amply clear that EV manufacturing is the next big thing in its vision. Now, it is the responsibility of the industry to rise to the expectations of the Government and work towards more localization.”
Mr. Rajan Wadhera, President, SIAM
We warmly welcome the various additional measures announced to promote EVs like reducing the GST to 5%, exemption in customs duty on EV parts and especially the Income Tax deduction on the interest component paid for loans taken for purchasing EVs. All these were recommendations given by SIAM and we are grateful to the FM for having accepted them. These measures will certainly help in making EVs more affordable and attractive to the consumers, which is in line with the recommendations made in the Economic Survey.
However, the auto industry is currently 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 Government during the previous two similar slowdowns. It is disappointing that the FM has not recognized the distress in the auto sector and not come out with any kind of support or stimulus
Mr. Ashish Harsharaj Kale, President, Federation of Automobile Dealers Associations ( FADA )
In particular for the Auto Sector, our budget expectations were high, looking at the Current State of the Industry as we were expecting specific measures in the budget to revive Growth in the Auto Industry and to that extent we are disappointed. Moreover, with an addition of cess on Petrol and Diesel leading to price hike by 1 rupee might impact Auto sales, especially in the Price sensitive 2wheeler segment.
In these trying time when Auto Sales are struggling, raising the limit of 25% Corporate Tax from turnover of up to Rs 250 Cr to up to Rs 400 Cr will definitely boost sentiments towards doing business and will benefit some of our members. Although, Our demand of Covering Partnerships and Proprietary Concerns was not met, which would have benefited majority of our members, we will continue to Follow-up on the same and hope to get relief during the Budget in February 2020.
President ACMA, Ram Venkataramani
“The Budget unveiled by Hon’ble Finance Minister is indeed futuristic and lays the foundation for India becoming a global economic powerhouse in the next few years. The industry welcomes the measures announced to improve liquidity in NBFCs. This will provide respite to the cash-crunch being faced by the industry as also help improve sales in the auto sector. NBFCs today extend credit for most vehicle sales in the country.”
“enhancement of duty on select items such as oil & air filters, glass, lighting, vehicular locks, horns, sound signal equipment, wind screen wipers, catalytic convertors etc. is welcome. This will not only provide impetus to the local manufacturing industry but also prevent sub-standard imports that adversely impact the domestic market, especially the aftermarket.”
Mr. Shailesh Chandra, President – Electric Mobility Business and Corporate Strategy, Tata Motors Ltd
“The incentives announced today by the Finance Minister, in terms of, additional interventions and steps to support the EV adoption, reinforces a strong commitment by the government to steer electrification on a faster trajectory. The proposal to lower the GST rate for EVs to 5% and reduction in duties of EV components, which we are studying, is a welcome step. It will help in further narrowing down the cost of ownership gap against ICE vehicles. Additionally, private buyers, who were earlier not considered for a subsidy through FAME 2, will now have a reason to seriously consider an EV with the tax exemption of up to Rs. 1.5 lacs.
Tata Motors has been proactively participating in EV ecosystem creation, aligned to the government’s vision of achieving a high EV penetration by 2030. Today’s announcement further emboldens our resolve and we will further accelerate our efforts.”
Mr. Akshay Kashyap, Founder and Managing Director, GREENFUEL Energy Solutions
The EV sector needed support from the Government in this year’s union budget. We were very delighting to see the focus of the government to work towards increasing EV adoption in India. GST reduction to 5% on EVs, the budget of Rs 10,000 crore allocated to the Faster Adoption and Manufacturing of Electric Vehicles Scheme and the additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles (EV) is an extremely positive move to make EVs affordable to consumers.
Mr. Suyash Gupta, Director General, Indian Auto LPG Coalition.
While the tax incentive and GST reduction on EVs demonstrate the government's focus on clean energy initiatives, yet again it is limited to the EV space. The budget should have focused on providing incentives to other clean fuels such as Auto LPG as well. It is imperative for the country to adopt a basket of alternative fuels rather than a singular focus on the EVs. Just by reducing GST on Auto LPG and on the conversion kits, the government could have given a key push to this sector. Hope the government addresses the issue soon in upcoming GST council meetings
Sulajja Firodia Motwani, Founder and CEO of Kinetic Green and Vice Chairperson, Kinetic Group
Announcements such as proposed tax breaks on Mega investments for lithium battery and cell manufacturing will pave way for a “Make in India” focus across the entire supply chain of EV manufacturing in India. All in all, the Government has taken several steps in the right direction for a rapid increase in investments in EV by the industry and adoption of EVs by the consumers. We welcome this budget and appreciate the Government’s commitment to lower pollution in our cities and move towards the fuel security of our nation!
Abhijeet Sinha - National Programme Director EODB at ASSAR
Income tax deduction of 1.5 lakh rupees on the interest paid on the loans taken to purchase EVs will motivate EV buyers in big way and banks will aggressively step into EV financing. GST rate on electric vehicles(EV) from 12% to 5% will motivate manufacturers of EV
Amit Raj Singh, Co-Founder, Gemopai Electric
The Union Budget 2019 surely has announced catalysts for the growth of the Electric Vehicles industry. The Government’s statement of purpose for making India become the global hub of manufacturing EVs is welcome and much needed. As a key player, we await a more detailed plan on the same to become a partner of growth for the Government. The much-needed reduction in the customs duty for components in EVs to 5% will help ship in more greener technologies and vehicles to the country. We also laud the reduction in GST on Electric Vehicles from 12% to 5%. The lowering or GST will make the transportation of the future more affordable for consumers. Currently, two-wheelers form only 16.4% of 7.6 lakh EVs sold in FY19. The reduction in GST along with an additional IT deduction of Rs1.5 lakh on interest paid on loans for EVs, will help break the entry and perception barriers for the price sensitive Indian customers
Avan Motors spokesperson
These policy initiatives will surely power the growth of the EV companies, and we are ready to play our part with the right technology and products. We also welcome the step by the government to resolve the angel tax issue, as most of the EV companies are in the crucial phase of the start-up lifecycle
Mr. Shekar Viswanathan, Vice Chairman & Whole-time Director – Toyota Kirloskar Motor
We appreciate government’s initiative to promote clean & green environment with special benefits to encourage electric vehicles (EV). EVs do bring the benefits towards fossil fuel conservation & lowering of carbon emissions. There are other forms of green mobility which will help the government achieve the same objective. The government should also align its taxation policies towards such green mobilities which promote reduction of fossil fuel & betterment of environment. Thus, the focus of taxation should not only be restricted to promote and facilitate the shift to all types of green mobilities but should also be towards all other means which contribute effectively to increased fuel economy and reduced tailpipe emissions.
Jubin Varghese, CEO & Founder, Gegadyne
With new lowered custom duties on EV components, there will be a significant price reduction on the overall cost of the Electric Vehicle which in turn will be a catalyst in the faster adaption of electric mobility throughout the country. Though the New Govt scheme to provide companies setting up battery manufacturing plants in the country with investment-linked income tax exemptions under 35 AD of the Income Tax Act and other indirect tax benefits will be pivotal to live the EV dream.
Mr. Amit Antil, DGM, Indian Auto Company
The proposed investment to upgrade rural infrastructure is a much needed relief and boost for the auto sector, this will have positive impact on the sales of commercial vehicles, 2 wheelers and allied industries. The upfront incentives for charging infrastructure , exemption of custom duty on certain parts would be welcome for EV adoption and also offering income tax deduction of 1.5 lacs on the interest paid on loans taken to purchase EV would help consumer adoption.