Budget 2020: Indian auto industry stakeholders have held extensive discussions with the government in recent past and they hope Finance Minister Nirmala Sitharaman's Budget will provide much-need relief measures to boost demand.
The cost of owning a vehicle has gone up to 12 per cent, and it is expected to rise another 10 per cent as the Centre's deadline on BS-VI emission norms kicks in. Considering poor demand and plunging auto sales, this could create further problems for India's $57 billion ailing automotive industry.
FULL COVERAGE: Union Budget 2020
As per an estimate, India's auto industry accounts for 2.3 per cent of its GDP and employs over 5 million people. However, the industry has witnessed its worst-ever half-yearly performance (till December) with overall revenues plunging 10.1 per cent at Rs 1.79 lakh crore. This has also resulted in around 100,000 people losing jobs and an estimated investment loss of about $2 billion that would have happened had the industry continued to grow.
Automakers' first and foremost expectation from the Budget 2020 is a reduction of GST or Goods and Services Tax. The auto industry says all stakeholders have unanimously sought a reduction in GST to 18 per cent from 28 per cent due to a major slowdown in the sector.
They also want the government to roll out various offers to encourage people to scrap vehicles bought before 1995 in its efforts to fight climate change and rising pollution level in all major cities of India. Both these demands will boost demand and, hence, revive consumption.
Their other demands include the allocation of more funds for state transport undertakings to procure more buses.
In line with the government's target for green mobility push in the country, the automakers want the Centre to slash import duty on lithium-ion cells. They believe monetary benefits on electric vehicles will boost sales and import duty cut on lithium-ion cells will give a fillip to Prime Minister Narendra Modi's 'Make in India' push.