Picture caption: Union Minister for Finance, Corporate Affairs and
Information & Broadcasting, Arun Jaitley (Blue jacket) departs from North
Block to Parliament House along with the Minister of State for Finance, Jayant
Sinha to present the General Budget 2015-16, in New Delhi on February 28, 2015. Picture courtesy PIB
The Electric Motor seems to
have scored over the conventional internal combustion engine in the Union Budget
2015-16. And rightly so! The electrical vehicle industry has been bleeding
profusely in the last few years because of lack of incentives from the
government for this industry. Companies like Naveen Munjal controlled Hero Eco
and Mahindra Reva of Mahindra & Mahindra which have been relentlessly and
tirelessly trying to promote electric vehicles in the country will finally be
seeing a bright light at the end of a dark tunnel.
Finance Minister Shri Arun
Jaitley presented the General Budget for the year 2015-16 in Lok Sabha on
February 28, 2015. The Budget has no direct impact on the automotive industry.
Though the industry had hoped for an excise relief, it did not happen. There
were some minor duty reductions as the Excise duty on chassis for ambulances
was reduced from 24pc to 12.5 pc. Also, the concessional customs and excise
duty rates on specified parts of Electrically Operated Vehicles and Hybrid
Vehicles, at present available up to March 31,2015 was extended up to March 31,
But as reported by Motown
India magazine, the electric vehicle (EV) industry has got a shot in
the arm with the Finance Ministry giving a nod for an interim National Electric
Mobility Mission Plan (NEMMP) which would enable electric vehicle manufacturers
to subsidise the sale of electric two-wheelers and cars. The Breaking
News report can be read on the following link:
In a press release, Sohinder Gill, Director- Corporate Affairs,
Society of Manufacturers of Electric Vehicles (SMEV), noted the Society has
welcomed the announcement on interim National Electric Mobility Mission Plan
(NEMMP) towards promoting Electric Vehicles and supporting charging
infrastructure and R&D investments.
"We would like to thank the
Central Government for clearance of National Electric Mobility Mission Plan
(NEMMP). The government has offered good support to EV's however the variable
VAT structure in states where in some states where VAT is as high as 14.5% may
nullify the effect.
The government has given an
incentive package worth Rs 14,000 crore to encourage demand and supply of
electric and hybrid vehicles in the country. The package announced in the
budget, aims to provide relief for technology development and research, create
charging infrastructure and directly give a subsidy to the consumer for buying
the vehicle," he said.
“It’s like a life saver for
the ailing companies who had invested into the environmentally friendly
vehicles but were bleeding heavily because of the lack of government support.
In addition to supporting the industry NEMMP will create a significant positive
impact on the health index of country by promoting zero pollution electric
vehicles and reducing the dependence on the fossil fuel.”
Gill believed that the biggest
beneficiary of the NEMMP will be companies manufacturing electric two wheelers
and small electric cars, who have managed to survive through the difficult
years and have been still active in the market. NEMMP is also likely to trigger
the entry of many of the major automotive players to start launching electric
and hybrid vehicles, he felt.
“Now that the centre has
cleared the roadmap for the growth of electric vehicles in India, SMEV expects
states to join in to support this initiative. At present many states like UP,
Punjab, Haryana, Maharashtra etc have been charging VAT as high as 14pc or
more, road tax of 4 to 6pc, nullifying the NEMMP’s incentives. SMEV requests
such states to immediately revert to 0 VAT and eliminate road tax for few
years,” he noted.
The government has an
ambitious target of putting five million electric and hybrid vehicles on the
road by 2020. Gill said that SMEV is confident that this figure can be achieved
if NEMMP is continued for its committed period of 6 to 8 years, state
government pitch in with their support and the manufacturers invest in
technology and capacity building.
Vikram S Kirloskar, Vice Chairman, Toyota Kirloskar Motor Pvt. Ltd and
President of Society of Indian Automobile Manufacturers (SIAM) complimented
the Finance Minister “for announcing the pro-India budget that would strengthen
the social fabric, improve governance and tax rationalization. Overall, it is a
positive budget for both corporates and individuals."
Arvind Saxena, President & Managing Director, General Motors India
said that “The budget looks to be a pragmatic one as it focuses on
infrastructural development, education, skill development, agriculture,
irrigation, health care, social security schemes etc. Given the condition of the economy, the
direction given in the budget is a positive one and the call for fiscal
prudence looks good. The government’s
intention to introduce GST, reduce the corporate tax from 30 to 25 per cent
over a 4 year period, simplification of the tax regime, financial sector reforms,
GAAR deferral etc are encouraging news.”
Saxena felt that the steps
outlined for the manufacturing, power, coal and mining sectors should spur
economic activity going forward. “Having
said this, a monitoring mechanism
should have been in place to ensure timely implementation of the projects in
these sectors. As far as the automotive industry is concerned, we were
expecting excise duty cut on all categories of vehicles as the auto industry
continues to bleed due to high interest rates, economic slowdown etc. There are
some changes in CST and also on customs duty which need to be clarified from
the fine print. Having said this, the focus on rural roads, highways,
expressways, incentives for electric vehicles are welcome decisions. Some of the other announcements made by the
finance minister on the direct taxation front are also positive steps. Overall, the budget lays down a blue print
for a stable tax regime that can lead to growth in the economy. These proposals and announcements made in the
budget, if implemented effectively, should have a positive impact on industry
and the economy as a whole going forward.
The challenge now is the implementation of the proposals. Our hope is that the market will respond
favourably,” he added.
Rajeev Singh, Head of
Automotive sector, KPMG in India said that the 2015 -16 budget has had no
direct impact on automotive industry at large other than an announcement in the
EV segment. “However, increasing disposable income in rural areas will improve
penetration of passenger vehicles and two wheelers. Credit of Rs 8.5 lakh crore
to farmers announced in the budget 2015 will indirectly boost the agricultural
equipment and tractors segment. The government is aligning to ensure at least one
family member will have an economic route to support the family indirectly,
this would improve the sentiments of entry level two wheelers,” he said.
He noted that investment in
infrastructure will go up by Rs 70,000 crores, revitalisation of PPP model of
Infrastructure, development of 1 lakh kilometers of new roads will have an
impact on commercial vehicles which has had a negative growth last year.
“ Later in the budget, the
government proposed allocation of Rs 75 crore towards electric mobility to move
to next level of clean technology. The industry can only be hopeful that this
would boost the consumer confidence. However, lack of EV infrastructure in
India will make it difficult for the segment to move at a fast pace,” he
He concluded by saying that
the government did not make any big bang announcements but stable investments
made across agriculture, infrastructure, manufacturing, various segments of the
society, etc. are focused towards a steady growth.
SM Lodha, Chairman, Indsur Group of Companies in a press release
stated, "The announcement that the much awaited Goods and Service Tax
(GST) will be introduced on April 1, 2016, will definitely rejuvenate the
industry. GST will make manufacturing
more competitive and support the 'Make in India' Campaign. How fast the Finance
Minister will move the wheels of change to usher in GST will be keenly watched
in the coming days.
“While other than
infrastructure spending there are no visible and concrete steps that could be
seen on the 'Make in India' campaign. However reduction in corporate tax will
benefit only few large state-owned enterprises and corporates. The budget will
not inspire the business communities as a whole, all said and done much more
was expected which could have benefitted all sections of society." Indsur
Group is a Mumbai-based global business house with operations spread over in
more than five countries. The group has
strong presence in manufacturing of steel castings, auto components, pipes,
steel and steel related products.
Sumit Sawhney, Country CEO and Managing Director, Renault Operations in
India said that it is a “well-balanced budget. It included a lot of
positive measures to give impetus to infrastructure growth. Another positive
was the announcement of a firm date on GST, which was a key pre-budget
expectation. Although we will have to study the fine print of the budget in
terms of clear programmes to boost investment, manufacturing and skill
development, the directional focus is in sync with the overall expectations to
boost growth. Taking cue from what was
shared about reform being a continuous process, we hope for ongoing measures
and policies to maintain a healthy balance between interest rates, inflation
and arrest the fall of the rupee, which will benefit the economy. Although the
budget didn’t have much for the automobile sector, we are hopeful for some
pro-business policies in the near future to benefit the industry."
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