Auto Industry Budget: Sector seeks continuation of infra thrust, green drive

The current account deficit (CAD) for H1 of FY24 dropped to USD 17.5 billion from USD 48.8 billion during the same period in the previous year, declining by 64.1 per cent

As Finance Minister Nirmala Sitharaman is all set to present the interim budget, the domestic automotive industry, while not expecting any big bang reforms, is desiring for continued focus on infrastructure development, complemented by sustained push towards greener vehicles.

Auto Industry body Society of Indian Automobile Manufacturers (SIAM), while indicating that it doesn’t foresee sector-specific announcements as this is a vote-on-account budget, expects the current execution of road, highway and other infrastructure projects to remain on track.

Rajesh Menon, Director General, SIAM told Moneycontrol, “The auto industry believes that the interim budget should focus on last-mile connectivity, infrastructure and policy consistency, which would propel expansion of the sector.”

Shashank Srivastava, Senior Executive Director, Maruti Suzuki, is of the view that the auto industry’s performance has a “close correlation” with the country’s overall  economic growth.

Seconding his thoughts, Swapnesh R. Maru, Deputy Managing Director – Corporate Planning, Finance & Administration and Manufacturing, TKM, added that policy stability and continued emphasis on spurring investment and infrastructure development will not only further enhance country’s global competitiveness but also lead to growth of the manufacturing and service sector, improve supply chain efficiencies and generate higher employment thereby leading to social gains.

The Automotive Component Manufacturers’ Association (ACMA), the apex body for the auto component industry, while lauding the government for the PLI and FAME schemes, is hopeful that these will continue to receive “generous budgetary allocations”.

Similarly, Automotive Tyre Manufacturers Association (ATMA), is seeking some duty cuts on raw materials, apart from more Free Trade Agreements to ease sourcing.

“From a raw material point of view, a few more FTAs would allow us to procure those that are not sourced or manufactured in India at competitive rates. In terms of duty correction, natural rubber is one of the areas which can be looked into. GST (on raw materials) is one of the areas that the government can think about. In the automotive value chain, PLI schemes for the tyre industry is an area which the government should consider," Anshuman Singhania, ATMA chairman, told Moneycontrol.

Meanwhile, EV industry body  Society of Manufacturers of Electric Vehicles (SMEV) expects the government to come up with an approach that will be beneficial in uplifting the EV industry in the coming decade.

Sohinder Gill, Director General of SMEV, said, “Permitting the inclusion of electric vehicles in priority sector lending would lower financial costs, potentially fostering greater adoption of these vehicles. The government could implement measures so that India can create an Atmanirbhar EV ecosytem and also enable technological advancements, particularly in the field of artificial intelligence.”