Finance Minister 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, 2016. Here
are the reactions from the industry:
SOCIETY OF INDIAN AUTOMOBILE MANUFACTURERS (SIMA): Vikram
Kirloskar, President, SIAM welcomed the budget and termed is as ‘forward
looking’ and addressing both, the social sector as well as the industry in an
“inclusive fashion”. Concessional customs and excise duties on select parts
used in the manufacturing of Electric & hybrid vehicles have been extended
for a year, which is a positive move, he said.
SIAM hailed the Finance Minister
for having accorded approval to the Scheme on Faster Adoption of Electric and
Electric Mobility (FAME). Although the initial allocation of Rs. 75 crores is
very modest, industry hopes that over the next a few months, more resources
would be allocated for promoting this new and green technology area, which can
be a game-changer for the automotive industry. SIAM had earlier requested for a
rise in the customs duty on commercial vehicles from 10pc to 40pc. The
effective rates have been increased to 20pc which is a welcome change. The
reduction in excise duty on the chassis of ambulances from 24pc to 12.5pc is
also a positive step.
A re-affirmation of the date of
implementation of GST from April 2016 shall help the manufacturers develop more
concrete long term plans on the products and investments, SIAM noted. The
reduction in the corporate tax from 30pc to 25pc over the next 4 years lays
down a clear roadmap which removes the uncertainties for industry.
The budget lays huge emphasis on
development of the infrastructure throughout the country and shall boost the
prospects of a wide range of industries including the automobile particularly
the commercial vehicles industry. A strong focus on the rural development
including substantial allocation under MNREGA would also ensure improved demand
from the non-urban centers which will benefit the auto industry.
Kirloskar said that in the
forthcoming budgets he would expect emphasis on renewal of the vehicle fleet
through fiscal incentives. Fleet renewal would help both the industry and the
society in terms of the environment, health etc, he added. SIAM would have
liked to see a reduction or moderation in the excise duty on vehicles
particularly for large vehicles attracting 30pc excise duty which has not
happened. We hope that the Finance Minister would reconsider the high taxation
on cars in the future, he added.
SOHINDER GILL HERO ECO: 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
GM INDIA: 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.
RENAULT INDIA: 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
MERCEDES-BENZ INDIA: Eberhard Kern, MD and CEO, Mercedes-Benz India
said that “The commitment to infrastructure, announcement of GST with a
specific timeline and a simplified tax structure greatly enhances ease of doing
business in India. These positive steps will simulate growth and should
indirectly help the automotive market. It is crucial now that these measures
are implemented within the next 12 – 18 months to accrue desired results.
Mercedes-Benz has already committed to the "Make in India" campaign
investing a total of 1,000 crore in its manufacturing facility and has the
largest installed capacity in the luxury car segment."
YAMAHA MOTOR INDIA SALES: Roy Kurian, Vice President, Yamaha Motor
India Sales Pvt.Ltd said that “Amidst the sky-rocketing expectations from
across sectors from the first full-term Union Budget of the Modi government,
the automobile industry has little reason to smile. However, keeping up the
positive sentiments, we see some indirect positives including reiteration of
GST implementation timeline of April 2016, significant increase in allocation
of funds towards road-building and reduction in corporate tax rate from 30pc to 25pc over the next 4 years. The overall economic
recovery and growth with positive parameters, GDP, rupee growing stronger etc.,
are a source of excitement for any business operating in India”.
“Further, the government’s
sincere focus on rural development and allocation of a huge sum of Rs. 34, 699
crores for rural growth is a good move as companies plan to target the untapped
potential of the rural market. Next, the intentions of making India a
manufacturing hub through ‘Make In India’ campaign will also give manufacturers
under the auto sector an added advantage. Also, the initiatives on skill
development will provide for skilled labour and expertise in our respective
sector,” Kurian noted.
AUDI INDIA: Joe King, Head, Audi India said, “It is no doubt a
visionary budget with focus on long-term growth of the country. We welcome the
move towards the rollout of GST next year. We are happy to see the emphasis
placed on boosting infrastructure. This will go a long way in fulfilling the
government's vision to make India the fastest growing large economy in the
world. We welcome the reduction of Corporate Tax as well as focus on
infrastructure via various schemes and investments. However, we expected more
of a direct support to the auto industry which has been contributing,
significantly to the GDP. The FM’s focus on working towards creating a
universal social security system for all Indians, specially the poor and the
under-privileged is commendable. However increase in service tax is a setback
for common man.”
NISSAN INDIA: Arun Malhotra,
Managing Director, Nissan Motor India Private Limited said that “We were looking forward to a
stronger emphasis on the automobile industry from budget 2015 but there doesn’t
seem to be much momentum on that front. While we expected the incentives on EV
to be more than what has come from the Finance Minister, we are happy that
there is progressive step in this direction. Also, the 0.14pc excise duty hike
on small cars and 2 wheelers does not have much of an impact. The industry
would have benefited a lot had the excise duty benefits been extended but this
budget has the potential to raise the consumer sentiment which will help the
industry grow. There were concessions given on some identified components for
EV’s in the past and these concessions continue for another year; we welcome
APOLLO TYRES: Onkar S Kanwar, Chairman, Apollo Tyres Ltd noted that
“This is a truly reformist budget and I’m most heartened to see that the
Finance Minister has set a solid roadmap for the Indian economy. There are big
changes for business as expected and the most awaited reform – that of GST, has
been finally announced. This is bound to reinvigorate industry and will make
definitely make manufacturing more competitive. The GST, by subsuming a large
number of central and state taxes into a single tax will help establish what we
need - a common national market.
The additional focus on roads and
rail infrastructure along with an increased spend of Rs 70,000 crore will also
prove to be beneficial for the economy as well as the tyre industry. The
announcement of the commissioning of five "ultra-mega" generation
projects to end India’s chronic power shortages is another commendable step to
ending our infrastructure woes. The further reduction in Corporate Tax from 30pc
to 25pc in four years is also a huge positive for us, as it will provide yet
another fillip to the ‘Make in India’ story.
“However, I continue to be
hopeful that the Finance Minister will also address the anomalies of the
inverted duty structure in the immediate future and give a fillip for tyre
manufacturers to 'make in India'”
ASHOK LEYLAND: Vinod K.Dasari, Managing Director, Ashok Leyland
noted that the “Main budget feels like solid middle order batting that follows
an explosive opening knock by the Railway Minister. Three themes in this budget are critical to
“The first theme is
infrastructure. Over 100,000 km of roads have been targeted over and above the
massive push in the rail sector, in addition to the discontinuous investments
in public amenities through the Swacch Bharat Abhiyaan. The massive boost in
infrastructure spend (Rs 70,000 crores), as well as the mechanisms announced to
fund it, will kick-start a virtuous cycle, resulting in significant primary
demand for commercial vehicles.
“The second theme is grassroots
entrepreneurship. MUDRA bank, formed to refinance MFIs, as well as the Jan Dhan
– Aadhaar- Mobile program are both directed towards creating grassroots
entrepreneurs. By entering the formal banking system, the poor get access to
lower cost finance, especially once the overdraft facilities kick in in Jan
Dhan accounts. Grassroots entrepreneurs
require low cost transport, and this will drive demand for SCVs.
“The third theme is reform.
Introducing a new bankruptcy law, announcing a roadmap to lower corporate taxes
and other such actions are clearly directed towards making India more
competitive to do business. Continued push in this direction will encourage
more players to enter India, bringing investments as well as boosting economic
While there has been no excise
duty modification in the automotive sector, he said he believed that long term
demand creation is more sustainable than short term sops to boost consumption.
The government has moved in exactly this direction with this budget, he said.
“The Government has also
correctly decided to drive small, incremental improvements rather than big bang
reforms. In our own experience, the centerpiece of any turnaround is not a big,
innovative idea but Mission Mode execution. This Government has demonstrated
its ability to execute in Mission Mode, for example, during the rollout of Jan
Dhan Yojana. I believe that this will continue," he felt.
FORD INDIA: Anurag Mehrotra, Executive Director, Marketing, Sales
and Service at Ford India said, “We welcome the government’s
clear focus on promoting infrastructure and investment in the Union Budget. We
also compliment a clear roadmap for GST implementation and expect this, along
with a clear focus on infrastructure development, to aid economic growth in the
long-term. A concerted effort to strike a balance between economic and social
indicators for growth has been outlined by the Government. This is certainly
positive and encouraging.”
SCANIA: Anders Grundströmer,
Managing Director, Scania India and Senior Vice President, Scania Group said that, “We at Scania feel overall, this is a
balanced budget with emphasis on Manufacturing as part of Make in India along
with appropriate importance to skilling India. We also like the Government’s
commitment to make the development process as environment friendly as possible.
While the increase in customs duty for commercial vehicles is disappointing ,
overall – the positives outweigh the negatives. The clear commitment to
implement GST by 1st April 2016 which is a game changer, easing of norms to aid
flow of technology, flow of capital, and focus on sustainable development along
with a road map of clearly stated goals in terms of 1 Lakh KMs of roads,
doubling the clean energy cess on use of coal and launch of a scheme for faster
adoption are all measures in the right direction. However, we would have liked
to have seen more clarity around the country’s biofuel agenda and sustainable
solutions in the transport sector. Bio-ethanol promises carbon savings of about
70 percent. Overall, the broad contours are all positive and we look forward to
partnering with India on this exciting journey.”
SKF INDIA: Shishir Joshipura, Managing Director, SKF India Ltd
noted, "With this ’high on governance’ budget, the government has moved
away from sectoral SOPs completely and has focused on critical macro points
such as transparency, ease of doing business and social welfare. Steps taken
towards creating a transparent model of governance and project clearances,
setting a direction for GAAR is a clear and positive message to the investors
towards ease of doing business. The roadmap for reducing corporate tax
gradually is a welcome move that will drive investments. Infrastructure, an
important sector has got a positive impetus . This budget has got something for
everyone, focussing on issues which aim to drive sustainable and inclusive
growth in a true sense."
Sigma Freudenberg NOK Pvt. Ltd. ( SFN ): Sigma chairman J D Singh said
“The offer of easing doing business in India with stress on replacing multiple prior permissions with a
pre-existing regulatory mechanism and raising of infrastructure investment by
Rs 70,000 crore in the Union Budget
2015-16 ,India will soon have all ingredients to become global sourcing hub for
automotive components and other make in India products.
“Union Finance minister Arun
Jaitley in his budget for the fiscal year 2015-16 has announced move towards ease of doing
business and promised to integrate all regulatory permissions at one source .
This will help India become a investment destination as well as generate more
jobs with more industry being set up in various parts of the country” said Singh.
Sigma group is one of the largest manufacturer and exporter of auto components
in the country. The Group has recently set up its second Indo-German and Japan joint venture
production facility in Basma,
Punjab for manufacturing of critical oil
seals and sealing products for Domestic and Global automotive industry with a
total investment of Rs.185 crore.
“In order to ensure adequate
availability of skilled man-power to achieve the objectives of ‘Make in India’
initiatives, the government’s plan to
launch a National Skills Mission through the skill development and
Entrepreneurship Ministry is also welcome. Our auto component industry has
shortage of skilled manpower, that will be overcome” said Singh ‘
“Suitable regulatory environment
will accelerate the growth momentum as India dia is ahead of many of its
far-eastern neighbours, including China in such parameters as design and
engineering capability, quality supply and customer and after sales support in
the auto component sector” said Jagdip Singh .
INDSUR GROUP: 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
“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.
Federation of Automobile Dealers Associations (FADA): Fada
maintained that the Finance Minister had presented a balanced budget with
emphasis on infrastructure development and ‘Make in India’.
The increased allocation in
infrastructure and rural development,
and emphasis on Make in India will put the economy on high growth trajectory,
thereby fuelling the auto market, it felt.
KVS Prakash Rao, President, FADA
said that a welcome announcement in the Union Budget 2015 is the assurance that
GST will be introduced from 1st April 2016.
“ The auto market in India has
been reeling under acute slowdown for the last three years. We, in FADA, were expecting special measures
including softer excise duty regime and high depreciation rates in respect of
motor vehicles, for giving boost to the auto sector.
We hope that the Finance Minister
will consider incorporating lower excise duty and higher depreciation rates in
respect of motor vehicles, before the Budget is finally passed by the
Parliament,” he said.