Budget 2015-16: Auto sector has little to cheer

Finance Minister Arun Jaitley announced this Government’s first full term budget today. The auto industry has been watching this budget closely with a hope of favourable decisions especially on the taxation front.  There has been very little to cheer though as no major sops were extended.

The big news out of this year’s budget is the implementation of GST from April 1, 2016, one of the auto industry’s top demands in our pre-budget coverage. Direct taxation will simplify vehicle pricing and will see a standardization of prices across the country. The Finance Minister has called for transformative measures on this front. 

A Rs 75 crore investment has been proposed to benefit Electric Vehicles. For the industry to realize sizeable growth in sales of electric vehicles or better infrastructure like charging stations, the investment allotted does not seem to be of much impact. It will however benefit the growth of small bicycle and electric two wheeler makers to increase electric mobility inside closed campuses.

Road infrastructure gets a boost with a proposal of one lakh kilometers to connect smaller regions of the country. Car sales in smaller towns should improve as a result but this will depend on speedy execution of road construction projects. The Government will set Rs 70,000 crore towards Infrastructure projects. 

The Make in India Campaign which is the Government’s pet project is yet to reveal its specifics. Finance Minister Arun Jaitley though states clearly that a boost to the Make in India campaign will see growth in manufacturing and exports soon from the stagnating levels right now.