Budget 2015-16: Auto makers hope for interest rate cuts, changes in tax structures

Indian industry leaders are hoping that the government and the central bank will ask lenders to lower rates to bring back investment momentum. This is particularly true for the Indian automotive industry and executives across car makers and two wheeler manufacturers echo this sentiment.

“Positive economic reforms such as lowering of interest rates, long term stability in excise duty structure and introduction of uniform tax structure can help in stable and sustained growth of the industry,” said Jnaneshwar Sen, Sr. Vice President, Honda Cars India Ltd.

“One step that the government can take to boost the industry would be to reduce the repo rate by RBI. This will boost investment in the economy and help the already existing companies by positively stimulating demand and also increase liquidity in the market,” said Vimal Sumbly, Managing Director, Triumph Motorcycles India.

In addition, a hike in income tax exemption limits on individuals could also boost demand for small cars and two wheelers.

“Interest rates need to be brought down to make vehicle financing attractive for the consumers. The sector is hopeful because of falling fuel prices, controlled inflation and expecting improved tax slabs leading to more disposable incomes and stalled infrastructure projects getting the go-ahead to give our economy a push,” said Roy Kurian, Vice President, Yamaha Motor India Sales Pvt Ltd.

Direct tax rates may see a major overhaul in the budget, and the government may well be looking to clean up levies on individuals and companies to create an investment-friendly regime and boost consumer sentiment. Personal income tax and corporate tax structures could see a significant revamp, leaving more money in the hands of individuals and companies.