Union Budget 2023: With a substantial impact on the GDP and employment of the nation, India's automobile industry is an essential component of the nation's economy. The rising demand for personal vehicles and an expanding middle class with increased disposable incomes have both contributed to the tremendous growth of the Indian automotive sector in recent years.
Additionally, the government's push for electric mobility and the growing concern for the environment are driving a change in the market towards electric and hybrid automobiles.
With the current shift, the Indian automotive industry anticipates many initiatives to support the sector's growth in the upcoming Union Budget 2023.
These include the implementation of new policies to encourage the adoption of EVs as well as the continuation and improvement of currently implemented policies and programmes, such as the FAME programme. The sector is also expecting some reforms in terms of GST, PLI schemes, etc.
The domestic automotive sector has significant potential for growth, driven by multiple factors. However, the sector is facing challenges and the government's support and policies will be crucial in addressing these challenges and driving further growth of the sector.
Below are some of the expectation from various industry players.
Niraj Singh, CEO and Founder, Spinny
There has been a huge surge in used car sales over the past 4-5 years, owing to the increased preference for personal mobility and the stigma of owning a used car going away as the market is becoming more and more organized. The used car market has been traditionally dominated by the unorganized sector. However, over the past few years, the share of organized players has increased from 8% to 19%. Considering this, a reduction in GST rates will encourage efforts to bring transparency to the segment dominated by variables.
Similarly, the Government should evaluate incentives such as allowing people to claim depreciation on vehicles, liberalise tax benefits and enable lower interest rates on capital, as this would not only motivate people to buy and upgrade cars but also contribute to the growth of India’s GDP & further organize the pre-owned cars market.
The new norms from the Ministry of Road Transport and Highways will encourage transparency, and address concerns regarding accountability and responsibility, creating a more level playing field between organized and unorganized entities. We are certain that the Government will introduce viable policy measures and significant initiatives in the upcoming budget that will help in propelling the industry.
Sanjeev Vasdev, Managing Director, FLASH
The Indian automotive landscape is growing from strength to strength, with auto components market playing a pivotal role in the progression. While, the industry is witnessing a paradigm shift towards electric mobility, auto components industry is witnessing a disruptive phase due to these novel advancements.
One of the key expectations from the budget is reduction in the GST rate, from 28% to 18%. It will greatly support the home-grown players to invest in newer technologies for enhanced mobility offerings, even at the global level. While, the government has been supporting the automotive industry through various schemes and incentives, the change in GST will offer huge assistance and boost to the fast-growing market.
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