The Indian auto industry seems set to record boost as the 2014 Union Budget has addressed its several issues. The finance ministry has declared the retention of benefits from excise duty cut and proposed the execution of Goods and Service Tax (GST), which the Indian auto industry was demanding from a long time. In the Union Budget, the Finance Minister, Arun Jaitley, mentioned that the government will come up with a solution in the ongoing year for the problems related to the implementation of indirect tax as well.
Industry experts are of a view that the prices of car and bikes will remain almost same in the current year owing to the favorable structure of the general budget. Along with, the declarations like cut in steel prices and removal of customs duty on the automotive components will also work in the favor of the industry.
Expressing his views on the 2014 Union Budget, the Executive Director, Mahindra & Mahindra Ltd. was quoted as saying, "The Finance Minister has delivered a well-defined and prudent budget with specific focus on infrastructure, manufacturing and rural schemes. To view it in the macroeconomic perspective, it has laid clear emphasis on supporting investment. Though there were no big bang announcements, the intent of the budget is clear. It is a move towards the right direction and there is an attempt to put a lot of placeholders through the various Rs. 100 crore schemes. In fact, I see this budget as a blueprint to the direction the Government will take over the next nine months. Specific to the automotive industry, the extension on reduction of excise duty had already been notified. We did expect an announcement on incentives for electric vehicles which did not come through. A firm date for GST implementation would have been welcome.”
However, the few demands of auto industry remained unaddressed in the Union Budget. Demands like Increase in the rate of depreciation on cars to 25 per cent, removal of 1 per cent national calamity contingent duty and provision of interest paid on car loans in tax deduction were ignored by the finance ministry. On the other hand, the allocation of massive Rs. 14,389 crore for developing roads in villages is expected to help the auto industry in near future.
