Union Budget 2015: What has the Indian Auto sector got?
Finance Minister, Arun Jaitley has announced the allocations to different sectors in the Union Budget, 2015. This was the first full term budget of the Narendra Modi led Government and all the sectors had their expectations from the Government to address the issues facing various business sectors. The same goes for the Automotive sector as well.
The Indian Automobile sector has been reeling under the pressure of high input costs and the new Government’s decision to roll back the reduced excise duties, with effect from Jan 1, 2015. The India Auto sector had expected that the Government would address issues like lowering excise duty benefits and interest rates on vehicles, expediting the implementation of Goods and Services Tax (GST).
Except for the speedy implementation of the GST, other demands of the Indian Auto sector has not been addressed in the 2015 Budget. However, the reduced corporate tax (i.e. from 30% to 25%) and the government’s primary focus on the infrastructure will indirectly work in favour of the Auto industry.
The Government has not addressed the primary demand by the auto industry to lower excise duty benefit. This means that cars and auto products will be more expensive in 2015. In February 2014, the UPA Government had reduced excise duties on cars, two-wheelers and SUVs in its interim budget. After this announcement, the excise duty on SUVs was reduced from 30 percent to 24 percent, excise duties on mid-sized cars were reduced from 24 percent to 20 percent and the large cars got reduction in excise duty from 27 percent to 24 percent.
When the new Government led by PM Narendra Modi was formed in June, the concession on excise duties were extended until December 31. Finally, the Indian Auto sector got a jolt from the Government when it announced its decision to rollback reduced excise duties that was effective from the New Year.
This was a major setback for the auto sector that was already reeling under the pressure of rising input costs. In the Budget, 2015, the government has not announced any changes in the excise duty structure, however, the Government will expedite the implementation of Goods and Service Tax (GST), which will be effective from April, 2016.
The Government has allocated Rs. 75 crore to the Electric Vehicle (EV) sector.