The recently revealed Union Budget 2022 by Finance Minister Nirmala Sitharaman had some big announcements for the auto industry that will impact the entire auto sector in various ways. While the budget as such didn’t have any sort of relief for the auto sector, it will definitely turn out to be in favour of the industry due to the various reforms and measures it announces. A major focus will be on promotions of electric vehicles and incorporating new technologies for their quicker adoption. Here’s a look at all the effects of Union Budget 2022 on Indian Automobile Sector–
The biggest highlight of the new budget for the automobile sector was the announcement of the new battery-swapping technology that will be introduced pretty soon. This will benefit the entire EV industry and the development will enable OEMs, charging infrastructure companies and EV component manufacturers to install battery-swapping stations across India. In the process, it will not only lead to fast adoption of electric vehicles but will even create new job opportunities.
Giving another push to the EV industry of the country, the Finance Minister has even announced an influx of electric vehicles in the public transport sector. This move is sure to encourage auto manufacturers to develop and produce electric commercial vehicles for the public transport sector. This will, in turn, reduce the consumption of fossil fuels, which, in turn, should help the Government curb pollution. Also, with the reduced dependency on fossil fuels, the cost of running the vehicles will also see a drop. This will also create new growth opportunities as well as job opportunities in the auto sector.
Yet another big highlight of the new union budget is the allocation of INR 20,000 crore to infra projects pertaining to transport of people and goods. This will even aid the expansion of the network of National Highways to 25000 km in 2022-23. A major focus will be on the improvement of road conditions for optimizing fuel efficiency and productivity. The improved road conditions will even reduce the wear and tear of vehicles, which will, in turn, bring down the maintenance costs.
Another step that will work in favour of auto manufacturers, especially, in the commercial vehicle sector, will be earmarking Rs 20,000 crore for infra projects that will, ultimately, lead to a demand for new CVs. This will surely help the CV sector at a time when it has suffered losses due to the pandemic.
The Budget 2022 also announces a Minimum Support Price (MSP) payment of ₹ 2.73 lakh crore along with other aids to the farming sector. This will improve the demand for new vehicles in the rural markets. This should prove to be beneficial for OEMs as a major chunk of new vehicle sales in entry-level segments of four-wheeler and two-wheeler markets take place in rural areas.
Speaking on the latest budget, Martin Schwenk, Managing Director & CEO, Mercedes-Benz India,“This Budget is overall growth oriented with a clear focus on digitization, electrification, infrastructure development and ease of doing business; aiming to propel a long-term growth of the Indian economy. The battery-swapping announcement is in the right direction and will be helpful to a limited segment. We however need a broader holistic view on the strategy around developing electric mobility for the passenger vehicle segment. A mid-to long term planning for demand creation is needed and we hope the fine prints will have ripple effect and passively stimulate growth for the auto industry.”
Mr. Unsoo Kim, MD, Hyundai Motors India Ltd., said,“Hyundai Motor India welcomes the progressive Union Budget announced today. Government’s strong approach towards accelerating infrastructure development, sustainability along with digitalisation in every-sphere of business will give strong impetus to overall economy while empowering consumerism in India. The vision for clean mobility creating electric vehicle ecosystem is a positive indicator for auto Industry and for its large supply chain. The forward looking budget will lay modular economic structure for every section of business and society in India.“
Mr Suhas Rajkumar, CEO & Founder, Simple Energy, reacted,”It is heartening to see that the government is looking at transitioning to EVs at a faster pace. Although battery as a service can be implemented for certain areas only, encouraging the private sector to create sustainable business models is a welcome move. Impetus should be given on developing safer battery packs as swapping stations cannot be applied to direct consumers given the safety aspect as this will further lead to making the ownership of the vehicle complex.”
Venkatram Mamillapalle, Country CEO & Managing Director – Renault India for Budget 2022, said,“We welcome the Union Budget 2022, which spells seamless growth for the Auto & Auto Ancillary industry in India. The government’s focus on ‘Aatmanirbharta’ will continue to provide impetus to build domestic capacities and push the agenda of ‘Vocal for Local’. The government’s focus on Battery Swapping policy to be brought with inter-operability standards and push for clean tech and electric vehicles will create the right ambient environment for EV introduction and overall harmonisation of the electric mobility aspiration of the nation. This move will prove to a giant leap for the nation in advocating introduction of cleaner propulsion technologies and will improve air quality and reduce consumption of conventional fossil fuels.
The government has laid emphasis for the development of the infrastructure within the country that will further help build capacities for the resurgence of the automotive sector in India and envisages Rs 20K Crore investment outlay in infrastructure projects, under the auspices of PM’s Gati Shakti that focuses on 7 engines of growth, including building the road transport network in the country. The National Highways network will be expanded by 25,000 km in 2022-23. Better roads will have a certain positive impact on the automotive sector. Finally, the government’s decision of strengthening the rural economy through a MSP payment of Rs 2.73 lakh crore along with other benefits with an objective of aiding the farming sector, will help increase the disposable income, improving the sentiment in rural areas and further improving the demand & aspirations of rural and semi-urban markets of India for personal mobility.”
So, here was a detailed analysis of effects of Union Budget 2022 on Indian Automobile Sector along with reactions from key industry persons. What’s your view on the same? Also, if you’re planning to sell your second-hand car, we, at Cars24, offer you an amazing platform to sell your used car online and benefit by getting the highest possible price for it. What’s more, we even sort out all the required documentation, including the RC transfer, entirely free of cost. You can check out our old car valuation tool to find out the right resale value of any used car on sale in the country.