EVs for the win
The latest union budget puts EVs right at the top of the government’s priorities when it comes to the automotive industry
THE AUTOMOTIVE INDUSTRY HAS BEEN struggling with poor sales numbers and dwindling growth forecasts for the past several months. It is said that a slow rate of growth for the automotive industry often tells a story about the economy as a whole. The new government that has come to power has announced a slew of measures to combat that. Described below are the most significant steps in that regard.
Continuing the push for the adoption of EVs by the previous government, the budget presented by the new government has made EVs much more affordable. The Union Finance
minister proposed a GST cut from 12 per cent to 5 per cent on EVs while also promising a complete customer duty waiver on e-drive assembly, onboard chargers, and charging.
Troubled NBFCs were relieved as the Finance Minister proposed guarantee on the purchase of loans from NBFC by banks for one year. The government has also proposed to cover losses of upto 10 per cent. This should have a positive effect on lending, especially for the commercial vehicle segment.
A 2 per cent interest subvention for MSMEs will certainly help automobile dealers and small component manufacturers. Also, a lower corporate tax rate of 25 per cent to corporations with a turnover of up to `400 crore will provide benefits for 80 per cent of the auto component makers and automobile dealers.
1,25,000 km of rural roads are to be upgraded with an investment of over `80,250 crore in the next five years. The move will help stimulate rural economy and will be great news for lastmile mobility.
However, there are protectionist measures in the budget too. For instance, customs duty has been increased from 25 per cent to 30 per cent on CBUs, with the argument that such a move will encourage local manufacturing.