Budget 2019: Top 5 expectations of automakers from PM Narendra Modi led govt

Budget 2019: Just like every other sector, automakers too are eyeing the forthcoming announcements by Finance Minister Piyush Goyal. Auto sector in last quarter have faced sluggish sales and hence their earnings have hit a slowdown. This budget is very important for NDA government, as it will impact the upcoming Lok Sabha elections, which are set to be held between April 2019 to May 2019. 

According to CARE Ratings, here’s a list of five things the auto industry expects from Modi government in Budget 2019. 

Industry expects subsidy on the battery and lithium imports or incentives to the companies to set up this business in India. The industry also expects additional funding from government to the support infrastructure – charging infra and robust smart electricity grid to take the additional load.

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The programme on Faster Adoption of Manufacturing of Hybrid and Electric Vehicles (FAME) to promote clean fuel technology cars, is expected to get further push with the auto industry gearing itself first for the transition to BS-VI (Bharat Stage – VI) emission norms by 2020, skipping the BS-V norms completely, post which the industry would be gearing for transformation of moving completely towards Electric vehicles (EVs) by 2030. The government may encourage R&D spends by companies in India – a move that will auger well for the industry that will shift to BS-VI emission norms in 2020 and to electric vehicles by 2030. 

Along with these, government’s focus on rural development (positive for tractors and two-wheelers segment), infrastructure and affordable housing (positive for commercial vehicles segment), lowering of direct taxes on income (higher disposable income – positive for passenger vehicles and two-wheelers), allocation of funds to skill development centres (technical skills for auto industry) should benefit the automobile industry going forward.

Also, if fund allocation to MNREGA increases, the volatility in the rural income will reduce leading to higher demand from Tier 3 towns and rural India for entry level motorcycles and passenger vehicles.