October 25, 2021

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Union Budget 2021-22: How did the auto industry react?

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, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsNEW DELHI: The Union Budget 2021-22 has the credit of bringing, for the first time in many years, smiles to many auto industry leaders with important announcements like voluntary Scrappage Policy, INR 20,000 crore to procure buses for strengthening public transport, tax holiday for startups and allocation of INR 50,000 crore for National Research Foundation. It has also left a few of them unhappy and unsatisfied with the customs duty hike on auto parts and the absence of any direct benefit for the electric vehicle and its allied segments.

In order to gauge the level of their satisfaction and their assessment of the new announcements in the Union Budget, ETAuto solicited the opinions and plans of some of the top industry leaders. Their responses and reactions are presented in the following lines.

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsVikram Kirloskar, vice chairman, Toyota Kirloskar Motor: “The long-awaited voluntary scrapping policy can help take older vehicles off the roads thus contributing to lower fuel consumption and pollution and also generating additional demand for cleaner new vehicles. The auto sector welcomes this announcement and is hopeful that for realising full benefits there will be an early implementation of this policy in its totality. Further, at Toyota Kirloskar Motor, we have continuously worked towards creating a self-reliant and competitive local manufacturing ecosystem. We are eagerly looking forward to the details of the Production Linked Incentive scheme that can potentially make India a part of the global supply chain for both traditional and advanced automotive technologies.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsRaghupati Singhania, vice-president JK Organisation, and chairman and managing director, JK Tyre & Industries: “The Finance Minister has presented a ‘pro-growth’ budget in these unprecedented times. It will boost the Indian economy, which is on the path to recovery. Rightly, there is an emphasis on infrastructure. It will help revive the economy and generate employment. Finally, the much-awaited scrappage policy has been announced, and it is a welcome step. This will increase sales of new vehicles and in turn, boost tyre demand.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsKenichi Ayukawa, president, Society of Indian Automobile Manufacturers ( SIAM): The announcement of major highway projects with a sizable increase in infrastructure outlay will help revive demand for both commercial vehicles and private vehicles. The addition of 100 new districts to the City Gas Distribution network for natural gas will help clean, efficient and affordable mobility for the country.

While SIAM awaits the vehicle scrappage scheme’s details, it hopes and requests that fitness testing and certification be much earlier and at frequent intervals to ensure safety, environment friendliness, and fuel saving.

The reduction in customs duty on some steel grades, and revoking of countervailing duty and anti-dumping duty on certain steel products is a welcome step. Since Platinum, Palladium and Rhodium are not available in India and are essential for emission control, their duty could have been made nil.

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsGuenter Butschek, CEO & MD, Tata Motors: “Budget 2021 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. The significant increase in overall allocation towards capital expenditure has been complemented with comprehensive measures to catalyse multiple levers- focus on rural, infrastructure investment, the impetus to manufacturing, social welfare, entrepreneurship and digital – to enable overall holistic development.

For the automobile sector, which is a significant contributor to India’s GDP, there are multiple welcome announcements including a voluntary vehicle scrapping policy to phase out old and unfit vehicles, augmenting public transport system in urban areas, continuing focus on adoption of cleaner fuels, and enhancing outlays for developing road infrastructure and expanding the Swachh Bharat Mission.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsMartin Schwenk, managing director and CEO, Mercedes-Benz India: “We welcome the policy stability that the budget provides to the industry by no new announcement of direct taxes, though we would have liked some reduction in compensation cess. It’s good to see some positive movement through the scrappage policy and we also expect the capital expenditures to help indirectly the industry. The decision to spend more on infrastructure, despite the high fiscal deficit, will boost the overall economic revival and we should see a positive impact on the PV market. However, the increase in the auto component duties is unexpected in such a revival period, and it will increase the production cost, leading to higher cost for consumers. There could have been further push towards e-mobility by lowering import duties on EV.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsBhavish Aggarwal, chairman and Group CEO, Ola: “Ola welcomes a progressive and growth-oriented budget. Measures under Atma Nirbhar Mission will help create global champions in automobiles, financial services and technology and foster an environment where India becomes integral to global supply chains. Increased investment in insurance and infrastructure will open new avenues of capital. Improvement in ease of business will transform India into a global innovation hub. We strongly support the government’s clean air focus with our EV plans that will accelerate the world’s transition to sustainable mobility.”

Chetan Maini, chairman and co-founder, SUN Mobility: “The main expectation from the Union Budget 2021-22 was a firmer commitment to and policy for accelerating e-mobility and enabling charging and battery swapping infrastructure in the country for the same. One of the key measures for doing so would have been to fix the inverted duty structure for components such as batteries from 18% to 5%, and for charging/swapping infrastructure services from 18% to 5% as well.

K M Mammen, chairman, Automotive Tyre Manufacturers’ Association (ATMA): “A sharper focus on infrastructure, including road infrastructure, through higher budgetary allocations and setting up infrastructure financing institutions augur well for several sectors of the economy including those which have been affected by the pandemic-induced disruption. Government’s reconsideration of customs duty policy aimed at promoting domestic manufacturing is a highly welcome move. Inverted duty structure in the tyre industry has created an uneven playing field and we look forward to the new customs duty structure which will be put in place by October 2021”

Shashank Srivastava, ED, Maruti Suzuki India: Under the current circumstances, it is a good budget because on the demand generation front, the government has substantially increased the investment infrastructure. This will increase jobs and employment. Scrappage policy is also a welcome move.

Ashok Minda, chairman and Group CEO, Minda Corporation: “I am pleased to see the Budget 2021, which has committed INR 50,000 crore for Research & Development to National Research Foundation. The foundation will ensure that the research ecosystem in the country is strengthened with focus on the identified national-priority thrust areas. We feel that a green economy and better air quality is a national priority. In a decade, when India is eyeing the electric vehicle ecosystem, the budget of R & D will further enhance its development and localisation. This will benefit the auto manufacturing sector as a whole. This will additionally supplement Aatmanirbhar Bharat and Make in India”.

Venkatram Mamillapalle, country CEO and managing director, Renault India Operations: “The budget lays a lot of emphasis on building core competencies and creating Global Champions in the manufacturing sector, creating world-class R&D, value chain providing scale and size in terms of growth, providing employment to youth in the country and the government has allocated INR 1.97 lakh crore over the next five years for the PLI scheme, creating fillip for economic growth. The Union Budget also lays the foundations for augmenting the road infrastructure in the country, under the auspices of which, over 13,000 km length of roads at a cost of INR 3.3 lakh crore has already been awarded under Bharat Mala project. By March 2022, 8500 Km of road, highway projects to be awarded and an additional 11,000 km of NH corridor will be slated for completion.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsPankaj M Munjal, chairman and managing director, HMC, a Hero Motors Company: “As expected, the Finance Minister has ensured that the focus of the budget has been on inducing a much-needed economic revival in a contracting economy. The commitment to infuse significant spending into building infrastructure projects and strengthening roads, public transport and metro systems augurs well for the automobile sector as well as for the economy at large as it will generate much-needed activity and employment in the economy. Taking note of the menace of air pollution, the Finance Minister has also proposed an outlay of INR 2,217 crore to help 42 urban centers address the environmental concern. This is a highly welcome move.”

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsNikunj Sanghi, chairman ASDC: “The Union Budget 2021 has given due importance to skilling and education which is a welcome move in today’s skill-driven industry. The government’s focus on supporting local manufacturing, skill development, and emphasis on job creation will lead to greater opportunities for the youth of the country.

In addition to that, the partnership with the United Arab Emirates and Japan to promote industrial and vocational skills, techniques, and knowledge is a major boost for the sector. Also, since automotive is the biggest organised employer in the country, the realignment of the existing scheme of national apprenticeship training scheme for providing post-education apprenticeship training of graduates and diploma holders in engineering is also a positive sign for automotive skilling.

, SEO, Wordpress Support & Insurance, Mortgage, Loans, Legal, Etc BlogsNaveen Munjal, MD, Hero Electric: “We are happy to see that the government has kept in mind various aspects to boost investments and job growth in the country. The proposal to relook at obsolete policies across sectors is a welcome move. As for the electric vehicles sector, while we do not have any announcement on the FAME Policy, we are happy with the vehicle scrappage policy. The policy that has been in discussion for a long time will definitely push the adoption of cleaner modes of transport across the country, thereby encouraging people to shift to electric vehicles. We look forward to working with the policy makers to create a conducive environment for electric vehicle OEMs in the country.”

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