Budget 2014: No major sops for auto sector

Finance Minister Arun Jaitley’s maiden Union Budget has not made any significant announcements to enthuse the automotive sector. The excise duty benefits have already been extended till December 31, 2014 in the interim budget and the Finance Minister did not make any new major announcements for the auto industry during his budget speech.

Despite the extension of excise duty benefits, car sales have yet to pick up significantly. Over the past two months, car sales have only improved marginally.

What will however, be reason for some enthusiasm, is the 15 per cent investment allowance proposed in the Union Budget 2014. This means that companies will now be eligible for an additional deduction on income tax by way of investment allowance of 15 per cent, provided there's investment of Rs 25 crore.

However, without an improvement in consumer sentiment, manufacturers will have to wait for some time to see improved demand to make new investments in capacity expansion and new technology. Auto manufacturers will hope the Budget 2014 will improve the overall consumer sentiment, which could well result in growth of the economy and more buying power to trigger a true revival of the auto industry.