Budget Proposals affecting the auto industry
o Special Excise duty for Passenger cars and Multi Utility Vehicles reduced by 8%.
o Excise duty (Basic+SED) now reduced to 24%.
o Excise duty on Electric vehicles cut to 8% from 16%.
o Excise duty on tyres reduced by 8% to 24% from 32%.
o Peak rate of Customs duty reduced by 5% to 25%.
o Four-laning of roads for a total length of 10000 Kms at an estimated
cost of Rs.40000 cr.
o Additional cess of Rs.0.50 on diesel and motor spirit to fund the
North-South and
o East-West Corridors and development of rural roads.
o National Calamity Contingent duty of 1% on Cars, Two Wheelers and Multi Utility Vehicles.
o Duty on chassis cleared for outside body building increased from 16% to 16% + Rs.10000 per chassis.
o Reduction in freight rates by 3-10% for POL products, Iron & steel, Cement etc in the railway budget.
Budget Impact
Excise Duty cut in Cars and MUV’s by 8% likely to be passed on to customers, in this highly competitive industry, leading increase in demand.
Competition from railways would affect long haul, HCV road transport operators, but short haul LCV operators may benefit due to increased goods movement.
Continued impetus given to construction of new roads and improvement of existing roads will spur demand growth in CV’s due to increased transporters efficiencies.
Steps towards limiting the interest rate for agriculture credit within a band may improve demand for tractors.
Mildly positive impact on account of reduction in input prices due to custom duty cut for CR sheets
Increase in duty on Chassis cleared for outside body building to bring about equity between OEM’s and independent body builders.
The Budget led to an increase in rural credit from Rs 51,500 crores this year to Rs 64,000 crores this year, this will fuel rural demand.
The Finance Minister has coupled this provision of credit with a reduction in NABARD interest rate from 11.5 per cent to 10.5 per cent.