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    Union Budget 2015: Reactions from the Automotive Industry

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    Sagar Bhanushali

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    Union Budget 2015: Reactions from the Automotive Industry

    The Union Budget for FY 2015-16 was presented recently in New Delhi and as much as we appreciate the government’s clear focus on boosting the infrastructure to aid economic growth in the long term, the fact that the budget didn’t have much for the automotive industry to cheer for has come as bit of a disappointment.

    While the rollout of GST (Goods and Services Tax) for standardizing pricing of vehicles across the nation is a welcome move indeed, a stronger overall emphasis on the automotive sector would have gone a long way in adding to the projected GDP growth. Nonetheless, here’s what some of the automakers catering to the Indian market think of the Union Budget 2015:

    Mr. Eberhard Kern, MD and CEO, Mercedes-Benz India:

    “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 crores in its manufacturing facility and has the largest installed capacity in the luxury car segment."

    Mr. Arun Malhotra, Managing Director, Nissan Motor India Private Limited:

    “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 0.14% 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 this move.”

    Mr. Anurag Mehrotra, executive director, Marketing, Sales and Service at Ford India:

    “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.”

    Mr. Joe King, Head, Audi India:

    “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.”

    Mr. Arvind Saxena, President and Managing Director, General Motors India:

    “The budget looks to be a pragmatic one as it focuses on infrastructural development, education, skill development, agriculture, irrigation, health care and social security schemes .  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 are encouraging news. 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 favorably.”

    Mr. Sohinder Gill, CEO Hero Electric:

    "We would like to thank 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 14000 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."

    Mr. Sumit Sawhney, Country CEO and Managing Director, Renault Operations in India:

    "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 programs 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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