Beyond the clamour for cut in duty that precedes every Budget, the automotive industry would like to hear the Finance Minister articulate a clean air roadmap this time around.

Their concerns are understandable, especially in the backdrop of the Supreme Court banning registration of diesel vehicles with engine capacities of over 2000cc in Delhi for three months. Whether this will continue beyond March 31 is the million-dollar question, but it has given a section of the industry sleepless nights.

Pollution norms Likewise, with the government stipulating that India will directly jump from Bharat Stage IV to VI emission norms in 2020, companies have their task cut out in earmarking investments for new technologies.

It is in this context that the auto industry is hoping that the Centre will offer substantial incentives to promote hybrid and electric cars. After all, if clean air is the way forward, green vehicles are the best bet except that they will require sops to make them affordable.

Larger outlay for FAME The outlay for the FAME (faster adoption and manufacturing of electric vehicles) scheme was ₹75 crore in last year’s Budget. Given the rapid pace of events this year on clean air regulations, the auto sector would be justified in hoping for a larger corpus to promote use of electric vehicles.

Infra investments Scrapping 10-15 year-old vehicles is an important part of the clean air regime and the FM will, hopefully, address the issue in greater detail as part of the incentives for the auto sector. Likewise, proposed investments on highways and roads will be welcome news to commercial vehicle makers.

Large chunks of the rural economy are in dire straits due to poor rains and this has taken its toll on sales of tractors and motorcycles. How the Budget addresses this issue and offers hope to both customers and manufacturers remains to be seen.

Not much is expected on excise duty breaks, even while the Society of Indian Automobile Manufacturers has sought a two-tiered structure of 12.5 and 20 per cent for small and large cars respectively. At present, this is 24, 27 and 30 per cent for large cars, in line with engine capacities and ground clearance stipulations.

The auto industry is critical to any economy and India in particular as it is tipped to become the world’s third largest market after China and the US by 2020. Multinationals are bullish on growth, especially when the country is in better shape than other emerging markets like Brazil, Russia, South Africa and the ASEAN region.

Yet, ad hoc decisions such as the recent three-month diesel ban in Delhi have spooked companies which have had to rework their business plans all over again. What they prefer is stability and this is where Budget 2016 becomes relevant.

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