This budget was a blue print for five years for all sectors of the economy. The auto industry needs stimulus to get the demand cycle going. It needed a temporary Goods and Services Tax (GST) relief to get the demand back. I hope the government will consider it.
This government has come up with a clear belief that the mandate that they have got brings responsibility on them to deliver on the promises they had made. I find a sense of urgency to get things done.
Everything that has been said about rural India is in line with what has been said before. A few new things were announced that will add to the thrust. So I won’t say that anything has changed drastically pre budget and post budget. It is the same direction that we have seen.
It is easy for us to say what happened and what did not. But the Finance Minister had to ensure that fiscal deficit did not go beyond 3/3.4%. Therefore I don’t think everything that one would wish would be possible.
The biggest thing that has happened in this Budget is the likelihood of better availability of finance and the likelihood of rates coming down. And that is a big thing. Today for example it is not that the demand is not there but a good number of people are not getting the financing. Hence if financing is made easily available it will make a huge difference in the market.
So far as fiscal benefit on EV is concerned what is not clear to me is whether this will only benefit personal buyers or also benefit fleet buyers. Many benefits have been announced by the government such as FAME II benefit, registration being free and this announcement as well as incentives for local manufacturing to EVs and benefits for setting up charging infrastructure.
As an industry we could not have asked for more. Though there is never enough. Now it is upto us and other players to make this EV dream a reality.
Our EV strategy has always been very aggressive and we do not need to change anything because of the Budget. We have been counting on EVs becoming big in India. At this moment we have fairly large capacity installation happening at Chakan and Bengaluru. I don’t think there is any other company in India that has invested in EVs more than what Mahindra has done.
In FAME-II there’s a lot of money set aside for charging infrastructure. The government gives a fair amount of subsidy if you want to set up a charging infrastructure and this will help.
Income tax benefits to those companies that are setting up manufacturing for lithium ion batteries in India or solar will also benefit. EV is a one term opportunity and India should become a hub for EVs for the emerging markets.
However, the main challenge is translating the intent to on-ground implementation. EVs is the biggest opportunity or the biggest threat to Make in India, depending on how we handle it.
India’s economy has to grow at 7% and for that is there enough in the Budget to spur demand? That is the only question mark in my mind.
We have to come out of the demand down cycle to demand upcycle. Then everything will fall in place. Stimulus to the economy is needed and GST reduction for a fixed period (and not forever) will help.
(As told to Lalatendu Mishra)
(Dr. Pawan Goenka is MD, Mahindra & Mahindra)
