By : TEAM TOS
The Union Budget presented by Nirmala Sitharaman is important as it is India’s first Post-Covid budget, after India entered a lockdown in March 2020, that has been considered one of the most stringent globally. Not only did this result in supply bottlenecks, travel restrictions, loss of jobs and livelihoods, but industry, virtually ground to a halt.
In the months leading up to the budget, there have been debates about whether a V-shaped recovery would take place, the need for and against an additional stimulus, and also how India can best leverage its Atmanirbhar policy to its advantage.
The captains of industry have welcomed the much-overdue Vehicle Scrappage policy and the thrust on road infrastructure, have been seen as positive steps to boost the economy battered by the Coronavirus.
To boost local manufacturing, custom duties rates have been increased on select auto products, as well as steel which is aimed at incentivising local production.
On GST, no changes were proposed in the Budget but the FM said every possible step would be taken to smoothen the GST and remove anomalies such as inverted duty structures.
Here is what captains of industry had to say:
Guenter Butschek, CEO & MD, Tata Motors
Budget 2021 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. The significant increase in overall allocation towards capital expenditure has been complemented with comprehensive measures to catalyse multiple levers- focus on rural, infrastructure investment, impetus to manufacturing, social welfare, entrepreneurship and digital - to enable overall holistic development.
For the automobile sector, there are multiple welcome announcements including a voluntary vehicle scrapping policy to phase out old and unfit vehicles, augmenting public transport system in urban areas, continuing focus on adoption of cleaner fuels, and enhancing outlays for developing road infrastructure.
Dr. Pawan Goenka, Managing Director & CEO, Mahindra & Mahindra Ltd.
This is a Budget with the head and the heart at the right place. I am glad that the scrappage policy has been acknowledged in the Budget and expecting the policy to be announced very soon. Though details are not yet out, when the policy comes out, it should have full incentive for scrapping and not just disincentivize for not scrapping. If I look at the tractor industry there is a lot of incentive on the agri economy and other agri businesses. Overall, the Finance Minister has delivered a promised Budget that will go a long way and not just for 1 year.
Martin Schwenk, Managing Director & CEO, Mercedes-Benz India
We welcome the policy stability that the budget provides to the industry by no new announcement of direct taxes, though we would have liked some reduction in compensation cess. It’s good to see some positive movement through the scrappage policy and we also expect the capital expenditures to indirectly help industry. The decision to spend more on infrastructure despite the high fiscal deficit, will boost the overall economic revival and we should see positive impact on the PV market. However, the increase in the rise in auto component duties is unexpected in such a revival period, and it will increase the production costs, leading to higher cost for consumers. There could have been further push towards e-mobility by lowering import duties on EV.”
Vikram Kirloskar, Vice chairman, Toyota Kirloskar Motor
The long-awaited voluntary Scrapping Policy can help take older vehicles off the roads thus contributing to lower fuel consumption, pollution as also generating additional demand for cleaner new vehicles. The auto sector welcomes this announcement and is hopeful that for realizing full benefits there will be an early and full implementation of this policy.
Gurpratap Boparai, Managing Director, Skoda Auto Volkswagen India
The budget augers well to create capacity for developmental and growth in the country. Increased outlays in the road sector, infrastructure development and introduction of the voluntary vehicle scrappage policy will not only create a safer and environment-friendly auto sector but also drive replacement demand in the sector.
Kenichi Ayukawa, President, SIAM
In a visionary budget, the government has adopted an expansionary stance with a thrust on infrastructure building with measures for efficiency improvement and increasing competitiveness. Good macroeconomic growth will translate to good auto sector demand. Specifically, the vehicle scrappage scheme has a good intent and the auto industry would be keen to work with the government on suggestions for maximizing benefits to environment and society.
Naveen Munjal, Managing Director, Hero Electric
While the budget didn’t have any announcements on the FAME Policy, we are happy with the vehicle scrappage policy that the government introduced. The policy that was in discussions for a long time will definitely push the adoption of cleaner modes of transport across the country, thereby encouraging people to shift to electric vehicles.
Sohinder Gill, Director-General, Society of Manufacturers of Electric Vehicles
The scrappage policy will encourage the adoption of greener vehicles. Though we await more details, we hope that it would be designed in such a way that would automatically push the adoption of electric vehicles. For Clean Air, setting aside an amount of INR 2,217 crores for 42 urban centres with a million-plus population is a good move. The fund could be utilized to spread awareness about the benefits of using e-vehicles for the environment. The government’s plan for strengthening the public transport sector under PPP models with an outlay of INR 18,000 crores for operating 20,000 buses is encouraging. The scheme could strengthen the EV industry if more e-buses could be supported through the scheme. We urge the government to mandate procurement of E-Buses under the scheme which would help us fight the issue of air pollution.”
Vinkesh Gulati, President, FADA
FADA is happy to note that the Hon’ble Finance Minister has finally announced the much awaited Scrappage Policy, though voluntary, to phase out old vehicles. If we take 1990 as base year, there are approximately 37 lakh CVs and 52 lakh PVs eligible for voluntary scrappage. As an estimate, 10% of CVs and 5% of PVs may still be plying on roads.