As with the previous budget, the Union Budget 2023 had little by way of direct benefits for the auto industry, while imported cars are likely to get a bit costlier. However, with steps like lowering of income tax slabs, most in the industry are hopeful of a continued surge in vehicle demand like last year, which was a record year for Indian auto manufacturers.
- Old government vehicles to be replaced
- Green mobility receives boost
FY2022 saw a 12 percent rise in new car and SUV sales in India, with passenger vehicle (PV) sales crossing the 3 million-unit mark (30,45,465 units) in cumulative sales, and India is also likely to overtake Japan as the third largest global automotive market for 2022.
Speaking to our sister publication Autocar Professional, Shashank Srivastava, senior executive officer, Maruti Suzuki India, said “The reduction in income tax will result in higher disposable income in the consumer’s hands, and therefore, should lead to a higher propensity to spend.” However, he cautioned that inflation will also be a key factor that will eventually dictate consumer spending, saying, “An automobile is a discretionary purchase and disposable income is not just income after taxes but also minus the inflation. Fortunately, the inflation projected for FY2024 is less both globally and particularly for India.”
Besides this, there are also the higher interest rates, crude oil and commodity prices, as well as geo-political issues which could impact overall sales, he added.
Budget 2023: Scrappage and battery boost
The government’s plan to set aside funds to replace its old vehicles and ambulances will also add to the new vehicle sales tally. Finance Minister Nirmala Sitharaman said, “In furtherance to the scrappage policy, states will be supported to replace old government vehicles and ambulances."
Electric vehicles will also see some upcoming benefit, with the minister announcing, “To further provide impetus to green mobility, customs duty exemption is extended for import of capital goods and machinery required to manufacture lithium-ion cells for batteries used in EVs." This move will provide impetus to plans for locally manufacturing battery cells in India.
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Imported SUVs, cars could get pricier as Budget 2023 raises customs duty