The Finance Minister - Nirmala Sitharaman, presented the 74th Annual Budget today. The budget is focused more on personal taxation with adjustments made to income tax, standard deduction, and taxes on long-term and short-term capital gains. Thereby, it could improve the buying capacity of the salaried class and could subsequently help the retail side of the automotive industry. While a new EV policy was expected in conjunction with FAME-III benefits, the finance minister remained at bay from the topic.
Talking on the Union Budget 2024, FADA President, Manish Raj Singhania said, "The recent budget announcement by the Government of India brings a blend of optimism and challenges for the auto retail sector. The focus on 'Garib', 'Mahilayen', 'Yuva', and 'Annadata' highlights a comprehensive approach towards inclusive growth, which is commendable. The enhanced Minimum Support Prices for major crops and the launch of Phase IV of PMGSY are positive steps that will boost rural incomes and improve rural connectivity, thereby potentially increasing rural auto sales.
Significant infrastructure investments, with an allocation of Rs. 11,11,111 crore for capital expenditure, will have a multiplier effect on the economy. Improved infrastructure is a boon for the auto sector, facilitating better logistics and enhancing the overall consumer experience. The adjustments in personal income tax, including increased standard deductions and relief for salaried employees and pensioners, are welcome measures that will enhance disposable incomes, fostering a more favourable environment for auto sales.
However, the industry must also navigate certain challenges. While the budget provides a robust framework for growth, the effective implementation of these policies will be crucial. We hope for continued support from the government in addressing specific issues faced by the auto retail sector, such as the transition to green mobility and the need for policies that support sustainable practices.
Overall, the budget lays a strong foundation for future growth, and we are optimistic about the positive impact it will have on the auto retail industry.
Santosh Iyer, MD & CEO, Mercedes-Benz India, also shared his reaction to the government's new climate finance taxonomy, saying "The budget clearly underlines Govt's priorities on creating a robust foundation for a developed Indian economy. We are glad the capex on infra projects tops govt's priority, with 3.4% GDP allocation. We were expecting GST announcement of long-term continuation of reduced GST for BEVs; however, developing a climate finance taxonomy to aid capital for climate adaptation and mitigating climate change, is a step in the right direction for achieving climate commitments."