What does the Union Budget 2021 mean for the Auto Industry?
With every one having their eye’s glued to the budget from the last 24 hours. I am sure every one have calculated their set of benefits and lost opportunities.
This budget was unique in many ways: This was the first budget post the Covid pandemic. Which meant it had to set a new path way for the post pandemic era. This was also the 1st budget of this decade (2021-2030). India’s growth path post pandemic is sketched with this budget.
Now, with regards to the auto industry, we all know it’s placed at the core of the economy. The auto industry has had its shares of highs and lows. The industry faced the liquidity crunch, increased in put costs, the pandemic had thrown in out of gear. The expectation of course was ease of buying new cars/used cars for the customers, which would end up improving the overall Auto Industry.
The initial reaction of course, is that this is a very positive budget, the government has decided to spend on infrastructure, encourage local manufacturing and promote public transport through buses.
What are the areas the Auto Industry stands to gain from with budget?
1.) Scrapping Policy:
Of course the much awaiting scrapping policy was touched base with. The key announcement being it is voluntary. This of course will not only help the sale of new cars, but also help in the cause of cleaner environment.
Also, The Fitness test would be undertaken. Details of which would be understood once we get clarity on the same.
2.) National Research Foundation gets budget allocation:
A separate budget of about 50,000 crores was allotted over a period of 5 years. This certainly will help in R&D and expectations are that auto industry will be a beneficiary of the same.
We have got new allocation for infrastructure and along with it 100% tax exempted for investment in Indian infrastructure projects. This will help boost the commercial vehicle sale, construction equipment sales. Also, will increase the demand for rural employment. 4.) Start-up & MSME:
The MSME stand to get a budget allocation of about 15,700 crore. With most of the ancillary industries being in the auto sector. And the front end sale chain of dealerships. Along with new start-ups in the auto sector. All stand to benefit from the same.
5.) Allocation of 18,000 crore for public transport through buses:
This is a master stroke. With better quality of road transport and public transport. We stand to gain maximum. Lesser cars on road and more convenient travel for the public.
And for the Auto industry players, this means a lot of Bus Sales, more employment, more investment on R&D, better quality service.
The budget 2021 is very optimistic and drives the concept of Aatmanirbhar Bharath.
The strong capital expenditure and encouragement of infrastructure spends along with a clear eye on technology will certainly help the auto industry to revive its self and growth faster.
(This article was written by Aamir Ahmed, an auto zealot at heart, and rev-head by profession. You can connect with him at https://www.linkedin.com/in/aamir-ahmed-b0688423/)