Auto industry looking for boost in Union Budget 2020

The Indian automobile industry is going through arguably its worst slowdown in 2019. There were several factors for that but one of the main reasons was probably the fact that there was no clarity on older cars after India moved from Bharat Stage-IV to BS-VI emission norms from April 1 this year.

The auto industry is in desperate need of a boost. In the Union Budget 2020 on Saturday, there is a lot of expectation from the industry that the Union Government will announce measures to revive the industry.

From measures to improving liquidity, to not doing anything drastic and giving electric mobility a big push, there is a lot of expectation.

Roland Bouchara, Senior Vice President, Sales and Marketing, Citroen India: said: “The long-term outlook for the Indian automotive industry is very strong as both, demographically and economically, the industry is well-positioned for growth in coming years. Hence, we are expecting a pragmatic budget with key focus on providing impetus to the manufacturing sector. The sector will also benefit from the government's strong focus on boosting infrastructure. The government’s continued commitment to provide the necessary support and investments in infrastructure, will encourage a strong and resilient domestic manufacturing sector.

“We hope the government further encourages the automobile industry and lays down long-term roadmap to help the sector plan its investments in new technologies and skill development. Further, we expect the government to take adequate measures in terms of improving liquidity which will lead to increase in consumer spending and in turn, boost the economy and GDP,” he added.

The Automotive Component Manufacturers Association (ACMA), the apex body of the Indian auto component industry, has reiterated the need for a uniform 18 per cent GST rate on all auto components in its recommendations for the Union Budget 2020.

Deepak Jain, President, ACMA said: “The automotive industry in India is undergoing a significant transformation due to new regulations and policy changes. On top of it the economic slowdown has deterred domestic consumption, we hope that the forthcoming budget will help uplift both the consumer and industry sentiments.

“The auto component industry contributes significantly towards employment generation and exports. The automotive industry accounts for almost half of India’s manufacturing economy, while the component industry accounts for a quarter. We are hopeful that the Government would consider our long-standing recommendation of 18 per cent GST on all auto components as also extend impetus to R&D and indigenous technology development.”

Vivek Srivatsa, Head Marketing, Passenger Vehicles Business Unit, Tata Motors, said: “Don't rock the boat is the only thing. Post clarification on GST change, post BS-VI regulation coming in, the customer will get an idea of what the prices are and what features there will be. There was a bit of uncertainty last year and there were a lot of rumours about GST reduction. So, customers postponed their purchase.

“There is a lot of uncertainty about BS-VI like when the fuel will be available and what is going to be the price increase. But I think it will become clear in the next one or two months, customers will come back into the purchase mode. Let the customers settle down and buy,” he added.

Rajeev Chaba, President and Managing Director - MG Motor India, said: “The budget announcements will be key to setting the tone for 2020 for the automotive industry. The government’s recent announcements on the promotion of EVs in India, especially for government use and public transport, is encouraging. However, we feel that more work needs to be done to promote EV adoption in India not only in public transport but amongst private customers as well.

“We hope that the government provides the right policy, incentives and charging infrastructure to put more EVs on the road. It should also look at providing incentives to stakeholders for sourcing critical raw materials for EV battery manufacturing in India. This will enable a strong EV-centric ecosystem and will be beneficial for the long-term growth of this high-potential space.

“The government should also look at offsetting the increase in GST costs due to the recently-introduced BS-VI norms to stimulate market demand for ICE vehicles."

Meanwhile, with the push towards electric, Ayush Lohia, CEO, Lohia Auto Industry: “We are pinning positive hopes on 2020 budget to create an optimistic environment for Electric Vehicle industry in the upcoming budget. We expect the government to ensure that they instruct the retail banks to provide finance for electric vehicles, perhaps at a lower rate than ICE units. Moreover, we want the government to refund the GST from whatever components the auto companies are currently purchasing.”

Shreyas Shibulal, Founder and Director of Micelio, India’s first seed fund with focus on clean mobility, said: "The need of the hour is a budget that focuses on creating an EV ecosystem through make in India - both in EVs and battery manufacturing, for long term sustainability and reduction in cost. There should be substantial budget allocation towards EV charging infrastructure. The government should have policies that facilitate incentives for EV owners in commercial and public space. It would also be great if we further encourage foreign investment by reducing GST charges for their investments in the EV startup space."