While there were no direct announcements on the automobile sector in the Union Budget, the exemption of customs duty on minerals is expected to aid in reducing electric vehicle prices, while alterations in personal income tax and the announcement of employment support are expected to help the sales of passenger vehicles and two-wheelers in the country.

“Focus on rural development, infrastructure investments, road connectivity, employment generation, talent upskilling, better financing environment, etc. augers well for the automotive sector. The GoI’s thrust towards supporting agri-linked cash flows through rural infrastructure development and improved allocation for farmer welfare schemes continued in the Budget. The revision in personal income tax slabs shall boost disposable income, thus triggering demand creation, especially for two-wheelers, where demand has been considerably affected in recent years due to a sharp rise in total ownership costs. The proposal for skilling programmes, internship opportunities and employment-linked incentives will help create a talent pool for the industry amidst technological developments,” said Shamsher Dewan, Senior Vice President & Group Head - Corporate Ratings, ICRA Limited.

Automobile dealers are anticipating an uptick in demand due to the initiatives announced by the government.

“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,” said Manish Raj Singhania, President of the Federation Of Automobile Dealers Association.

Custom duty

Electric vehicle prices are likely to decrease as the government announced the exemption of customs duties on minerals in the Budget.

“We commend the Union Budget 2024-25 for its announcement to fully exempt customs duties on 25 critical minerals, including lithium, essential for EV battery manufacturing. This move is expected to significantly reduce battery costs and bolster domestic manufacturing capabilities. By reducing import costs and encouraging regional development, this plan represents a significant step forward for our industry and the economy as a whole. Additionally, our products in the micro-mobility segment will benefit greatly from these measures, enabling us to offer more affordable and efficient solutions to consumers,” said Tushar Choudhary, Founder & CEO of Motovolt Mobility.

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