So the finance budget for the year 2015 has just been announced, and though taxation in a few sectors has been reduced, for some it has been increased for the benefit of the industry, consumers and the nation as a whole. Touted a ‘Sabka Budget’, so far it has impressed people from the manufacturing sectors, but not directly from the auto sector - implementation of GST and the reduction in corporate tax should indirectly benefit the auto manufacturers.
To begin with, customs duty on commercial vehicles has been increased from 10% to a whooping 40%, which spells bad news for players like Ashok Leyland, Eicher motors, Force Motors and Tata who are the market leaders in this segment. This will certainly have a negative impact on them, affecting their business for 2016.
Electric and hybrid vehicle manufacturers can rejoice, as the excise duty on these has been waived. To promote green vehicles and aid in their acceptability and popularity, the government has allotted Rs 75 crore. This should allow us to see more e2Os, i8s and Prius’ our roads. This exemption in duty on EVs will certainly benefit Mahindra Reva which manufacture’s the e2O and hopefully BMW which recently launched it i8 hybrid supercar in India.
Central Excise duty has been rounded off to 12.5%. Auto manufacturers were hoping that the Budget would steer banks to reduce the interest on auto loans to aid in consumer buying, but this topic has remained untouched along with other demands from the auto industry such as reduction on customs duty on vehicles, as well as reduction on excise duty on SUVs. There have been no substantial announcements for the two wheeler industry as well.
Final thing that would impact us directly, import duty on petrol and diesel has been increased to Rs 8/litre from Rs 2/litre.
