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Budget 2022: What the automotive sector needs

Restoration of consumer demand, lowering of costs and policies to help support local manufacturing – all eyes are on the 2022 Union Budget to provide relief to India’s ailing automotive sector.

January 31, 2022 / 07:25 AM IST
Representative image

Representative image

The Indian automotive industry awaits some much-needed respite from the 2022 Union Budget, hoping for some crucial policy introductions that can pave the road to its recovery.

After coping with the after-effects of BS-VI regulations, followed by COVID's relentless two-year-long assault, the need for support from the government remains at an all-time high, with the semiconductor shortage and existing commodity and fuel price hike having slowed down demand. Stable, consistent and long-term policies appear to be the buzzwords collectively emanating from the grapevine. Here are some of the need-of-the-hour exemptions and incentives that could turn things around for the Indian automotive industry.

The EV Sector

If there’s one sector that’s shown considerable promise over the last year, it’s the EV sector. However, EV infrastructure along with PLI scheme incentives for the 250 plus EV start-ups remain areas that need working on. Many EV players, including Hero Electric MD Naveen Munjal, have expressed skepticism in the ability of the multitude of EV startups to survive the decade without consolidating, and so the PLI scheme for EVs needs to take survivability into consideration in order to keep the ecosystem thriving. FAME II subsidies have gone a long way in creating demand for EVs, but it needs to be extended with price caps recalibrated for inflation and the increase in prices of parts and commodities. The Rs 15 lakh and Rs 1.5 lakh cut-off for EVs and electric two-wheelers respectively, will not suffice.