AUTOMOBILES. Tax sops for customers will spur buying

The Budget is just one part of the auto industry’s rather pressed timetable for the year.

Come April, it will need to prepare itself for the new Bharat Stage IV emission norms which will then be followed by a regime on new safety standards. In the interim, it will be hoping that the Goods and Services Tax will become a part of the Indian landscape by July this year along with some clear directives on scrapping old vehicles.

The biggest challenge will be unravelled in April 2020 when the BS-VI norms kick in. This will make India the first country in the world to skip BS V emission levels while jumping directly to BS VI. To put it simply, auto-makers will have less than 1500 days from now to make substantial investments in technology for a new clean air regime while keeping their fingers crossed that adequate fuel supplies are assured across every nook and corner of the country.

Is the Budget, therefore, only a sidebar in this critical chain of events? Of course not! It becomes especially relevant considering that the country has just gone through an astonishing upheaval since November 8 when the Centre decided to demonetise high value currency. As 86 per cent of hard cash was sucked out of the system, sentiment naturally went for a toss and sales in rural India were hit particularly badly. This explains why tractors and two-wheelers ended up bearing the brunt of the impact.

Industry will be hoping that the Budget announces enough sops to create a feel-good effect for customers who would then be incentivised to buying cars and bikes all over again. This would ideally be in the form of tax reliefs as well as initiatives on low-cost housing. The idea is to send a message to the residents of ‘Bharat’ that things are on track and they have little to feel apprehensive about.

From manufacturers’ point of view, seeking excise duty reliefs in the Budget does not really count given that the GST is due to be rolled out in July. Yet, even here, there is some anxiety about the Centre being able to stick to this date. “After all, GST was scheduled to roll out in April and we can only hope that it does not get put off once more beyond July,” a top executive told BusinessLine .

The fear is that the results of the Assembly elections could have a bearing on GST especially in the case of Uttar Pradesh. It is here that the fortunes of the BJP could impact the implementation of this all-important tax reform. A comfortable win may lead to a relatively easy roll-out but a victory for other parties, still smarting from the demonetisation move, could put the BJP on the backfoot in Parliament and lead to a further delay in GST.

Automakers will also be hoping that the Budget offers hefty incentives for hybrid and electric cars especially at a time when India is fast forwarding its clean air timetable.

Thus far, the outlay for electric cars has been modest at best which also puts in perspective why e-mobility has still not kicked off in right earnest. In addition, announcements of concrete measures on highways and road-building will be welcome in the Budget.

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