Budget 2018: Personal finance

Budget to boost truck, tractor, 2-wheeler sales

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Luxury car segment receives setback

Increased spending in the rural areas and agriculture sector would benefit the auto sector, feel analysts. Besides higher allocation for construction of roads will also benefit the sector, they added. The government has allocated ₹5.97 lakh crore for infrastructure and the transportation sector has got an all time high allocation of ₹1,34,572 crore.

“Increased allocation for infrastructure projects such as National Highways (target completion in FY17-18 is 9000 KMs) and Bharat Mala project (target completion of 35,000km in Phase 1 at cost of ₹5.35 lakh crore) for seamless connectivity in the union budget should give much needed push to the sector especially the Medium and Heavy Commercial Vehicles segment,” said Rajeev Singh, Automotive Sector Leader in Deloitte.

“Good rural focus (credit for agricultural activities increased from ₹10 lakh crore to ₹11 lakh crore) will primarily help to boost retail growth in rural market and thereby bring more growth in auto industry,” he said.

For example the higher minimum purchase price for crops will boost rural income thus driving demand for two wheelers, farm equipment’s and LCVs (light commercial vehicles) in rural areas.

However, the imported luxury car industry will be affected due to increase in basic customs duty. “With doubling of the BCD rate for engines from a current levy of 7.5% to 15%, manufacturing cost of automobiles with imported engines is expected to see a steep rise,” Abhishek Jain, Tax Partner, Automotive sector, EY India said.

“The costs further being stressed with increase in BCD rates for various parts and accessories as well as seats. While these would typically impact auto manufacturers in India who import parts of the vehicle, similar impact is expected to be sensed by those importing motor vehicles in CKD forms as well,” he said.

Rahil Ansari, Head Audi India, said “For the luxury auto sector, the Union Budget 2018-19 is disappointing and is against the spirit of partnership. As manufacturers, we have a core social responsibility towards our workforce and the dealer network.”

He said the Increase in custom duty and introduction of Social Welfare Surcharge in lieu of an Education Cess (which is higher than the erstwhile Cess), was going to definitely affect the prices again, which will further confuse the customer.

He also said that lack of concrete measures for government’s ambitious E-mobility project was ‘surprising’.

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Printable version | Jan 29, 2020 3:04:26 PM | https://www.thehindu.com/business/budget/budget-to-boost-truck-tractor-2-wheeler-sales/article22624942.ece

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