Although there was not much for the auto sector in the Budget this year, manufacturers are hoping for better sales from the announcements made for rural development and infrastructure.

“The market is better, though still a little bit hit due to demonetisation in 2016, but we are expecting better growth next year.

“The industry is expected to grow at 8-10 per cent, but we will grow better than the industry,” Kenichi Ayukawa, Managing Director and Chief Executive Officer, Maruti Suzuki India (MSIL), told BusinessLine .

When asked about the Union Budget’s failure to mention electric vehicles, whereas the Transport Ministry has been talking about making electric cars mandatory by 2030 on Indian roads, Ayukawa said that is a separate topic, which is being handled by the government altogether, and hence, not mentioned.

“The Budget this year has been quite neutral as far as the electric vehicle industry goes.

“It is more focussed on rural development, infrastructure and fiscal consolidation. We are now awaiting the formal EV policy and are hopeful that the FAME scheme will continue to support EVs post March 31,” said Mahesh Babu, CEO, Mahindra Electric.

But, the Budget continued to hike custom duty on completely built units (from 20 per cent to 25 per cent) and completely knocked down units (from 10 to 15 per cent), of cars and motorcycles this year too, which was a surprise for many of the luxury car makers.

Import duty hike

“The increase in the basic customs duty of auto parts, accessories and CKD components varying from 5 per cent to 10 per cent, clubbed with the new social welfare surcharge at 10 per cent, at a time when the auto industry is reviving, is unfortunate, and comes as a surprise,” said Roland Folger, Managing Director and CEO, Mercedes-Benz India.

The increase in basic customs duty hike will restrict the growth of the luxury car industry and this will only result in the loss of additional revenue, which would have increased significantly with increase in volume, he said.

Some industry veterans and experts also said that growth will depend on implementation of various projects mentioned in the Budget.

Meanwhile, the auto manufacturers recorded better sales growth in January on a year-on-year (YoY) basis, with companies such as Tata Motors, Mahindra & Mahindra, Ford India and Toyota Kirloskar Motor reporting a double-digit growth.

However, Honda Cars India, Indian subsidiary of the Japanese carmaker Honda Motor Japan, failed to grow like others and reported a 5 per cent YoY decline in January sales.

Two-wheeler and commercial vehicle companies also reported a double-digit growth on YoY basis.