New Delhi: The second budget by Finance Minister Nirmala Sitharaman, and also the longest of all time, had no special measures to help the automotive industry in crisis to see a change. The industry, which contributes seven per cent of the GDP, has seen sales fall for more than a year. She had expected to see a cut in the goods and services tax (GST), clarity on a long-awaited scrapping policy and incentives for manufacturers of electric vehicles and batteries.
Most of the expectations of car manufacturers and related companies remain unresolved. There has been an increase in customs duties on electric vehicles.
“Under the Make in India initiative, well-established customs tariffs were previously announced for items such as mobile phones, electric vehicles and their components. This has ensured a gradual increase in the ability to add domestic value in India. Customs tariffs are being reviewed in electric vehicles and mobile parts as part of these carefully designed manufacturing plans,” Sitharaman said in her speech.
Rajeev Chaba, President and Managing Director of MG Motor India, described this walk as a bit hard. He said that the customs duty increase from 10 to 15 per cent on the e-vehicles assembled in the country. There is a fear of new launches to get affected.
According to the new tax reforms, 70 tax exemptions have been eliminated, but revenues between Rs 5 lakh and Rs 7.5 lakh will be taxed at 10 per cent (below the current 20 per cent), income between Rs 7.5 lakh and Rs 10 lakh will be taxed at 15 per cent (below the current 20 per cent), income between Rs 10 lakh and Rs 12.5 lakh will be taxed at 20 per cent (below the current 30 per cent), income between Rs 12.5 lakh and Rs 15 lakh will be taxed at 25 per cent (below the current 30 per cent) while revenues above Rs 15 lakh will continue to be subject to 30 per cent taxes.
The automotive industry believes that these reforms could help increase people’s purchasing power and, in turn, help the industry. “The reduction in the income tax will definitely put more purchasing power in the hands of the middle-class consumer, however, this will not greatly affect their decision to buy cars. Also, due to the BS-VI transition, car prices will increase soon,” said Pawan Goenka, Managing Director of Mahindra & Mahindra.
The industry calls it a more or less “balanced” budget.
“The Budget exhibits a good balance between spending to boost growth and maintain fiscal prudence. The attempt to address the trust deficit by institutionalizing taxpayer statutes would exude more business confidence and trust among taxpayers and is a welcome step. The attempt to simplify individual taxes will lead to better compliance, increase disposable income for consumption and, in general, predict a very stimulating growth,” said Naveen Soni, Senior Vice President (sales and services), Toyota Kirloskar Motor.