Story by Team CV
The Indian auto industry has reacted to the Union Budget 2021. The focus of the union budget, it is clear by now, is on health and infrastructure. In his post budget reaction, Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM) has expressed that the budget is visionary and reflects government’s expansionary stance with a thrust on infrastructure building with measures for efficiency improvement and increasing competitiveness. “Good macroeconomic growth will translate to good auto sector demand,” he mentioned. The official Daimler India Commercial Vehicles statement regarding the 2021 union budget welcomed the government’s decision to introduce the voluntary vehicle scrapping policy and the budget allocation for the road projects under the Bharatmala programme. It reads that there is a need to understand the actual infrastructure spends in the state government budgets that will help create buoyancy in the market. The announcement of infrastructure for roadways, the statement mentioned, would create more demand for BharatBenz products in the construction tipper segment where a growing customer base is already visible.
Said Nishant Arya, Executive Director, JBM Group, that the allocation of Rs.18,000 crore for the public bus transport services has come as a sigh of relief for the bus makers who have been caught in the doldrums from 2019. “The proposed PPP model will in-turn help the sector to create employment as well and overcome the adverse effect of the pandemic,” he added. Of the opinion that the heavy and medium commercial vehicle sector will see a boost in demand as a sum of Rs.5.54 trillion has been allocated for infrastructure development, Arya remarked that the 2.5 to five-percent reduction in customs duty on some of the semi-finished and finished steel products will have a positive impact on the automotive industry. Dr. Pawan Goenka, Managing Director & CEO, Mahindra & Mahindra Ltd., expressed that the budget is growth-oriented. It has a significant focus on healthcare and infrastructure, he added. Kamal Bali, President & MD, Volvo Group India, averred that the Budget 2021-22 will spur growth and has the potential to generate employment with a focus on key sectors like healthcare, infrastructure and manufacturing. “The focus on scrappage policy and PLI for automotive sector needs to be studied for details. The promised review and consolidation of GST and Customs Duty structure (rates) by Sep 2021 is a welcome development,” he added. According to Bali, the purchase of 20,000 buses will augment and render the much-needed support to the industry.
About the Union Budget 2021-22, Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor, said that it strikes an remarkable balance between growth and fiscal prudence by setting pragmatic revised targets and glide path for fiscal consolidation. It emphasises on capital expenditure and infrastructure creation through borrowing and asset monetization and not through any significant increase in taxation, he added. Of the opinion that the voluntary scrapping policy can help take older vehicles off the roads to lower fuel consumption, pollution, and generate additional demand for cleaner new vehicles, Kirloskar expressed that they have continuously worked towards creating a self-reliant and competitive local manufacturing eco-system. The production linked incentive scheme could potentially make India a part of the global supply chain for both traditional and advanced automotive technologies, informed Kirloskar. Guenter Butschek, CEO & MD, Tata Motors, said that the union budget 2021-22 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. He added that the significant increase in overall allocation towards capital expenditure and comprehensive measures like the focus on rural development, infrastructure investment, impetus to manufacturing, social welfare, and entrepreneurship and digitisation, would enable holistic development. From the auto industry perspective, Butschek highlighted the voluntary vehicle scrapping policy, measures to augment public transport system in urban areas, continuing focus on adoption of cleaner fuels, outlays for road infrastructure development and Swachh Bharat Mission.
Budget for suppliers and MSMEs?
Sanjay Phadke, EVP & Head – Global Platforms, Alliances & FI Business,Vayana Network, an electronic network that connects corporates and their supply chain to financial institutions for easy, quick and low-cost access to trade financing of their payables and receivables, that the focus on enhancing macro spending across healthcare, infrastructure and large scale manufacturing spells a big positive. The resultant virtuous cycle will provide a significant tailwind to MSMEs too. There are many specific measures on changes in duties, easier compliances etc that would provide support to MSMEs that are ravaged by Coronavirus crisis, he added. Ashwath Ram, Managing Director, Cummins India, described the budget as progressive with a focus on the socio-economic development of the country and emphasis on railways, the power sector, infrastructure, healthcare, and enhanced digital connectivity. “The voluntary vehicle scrappage policy,” he said, “will have a positive impact and drive the commercial vehicle and auto sector forward.” “MSMEs and other user industries, affected severely by the recent sharp rise in iron and steel prices, will receive a push by the decision to double the allocation of MSME and reduce the customs duty on some of the steel products, remarked Ram. He drew attention to the government’s focus on highways and infrastructure investment. This will provide the necessary impetus to the CV and construction equipment businesses,
he added.
Of the opinion that the budget is optimistic, Farrokh Cooper, Chairman & MD, Cooper Corporation Pvt. Ltd., mentioned that the significant stress on railways, power sector, infrastructure, healthcare, banking, insurance, and agriculture will help revive the country’s economy. He added that the voluntary policy to scrap vehicles would have a positive effect on the automobile industry. The decision to double the allocation of MSME and to reduce the customs duty on steel, Cooper remarked, would help. Vikas Bajaj, President, AIFI (Association of Indian Forging Industry), said that the budget will have a positive effect with the focus on railways, power, health, infrastructure, banking, and insurance and agriculture sectors. The voluntary policy on vehicle scrappage will have a positive effect on the auto sector, he added. The positive step to reduce customs duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy, and stainless steels would contribute to better raw material prices and lower input costs, remarked Bajaj. Sanjay Gupta, Vice President and India Country Manager, NXP Semiconductors, expressed that the first-ever digital budget’s focus on ‘Atmanirbhar Bharat’ and R&D is welcome. Positive is the announcement to invest Rs.50,000 crore in the National Research Foundation over the period of five years, he added. Of the opinion that R&D is the lifeline for any organisation, Gupta said that there was a need to focus on ‘design-in-India’ and ‘Make-in-India’ to get ahead of
the curve.
Said Suresh KV, President, ZF India, that the budget is in-line with the government’s vision for ‘Atmanirbhar Bharat’. Welcoming the voluntary scrappage policy announcement, he averred that backed up by an effective implementation plan it would really boost the growth of the auto industry. Drawing attention towards the announcement to allocate 1.18 lakh crore to improve public transport in Indian cities and procure 20,000 new buses, Suresh KV stated that a strong push in infrastructure building including roads, economic corridors and railways will enhance the demand for heavy and medium-duty commercial vehicles and increase employment opportunities. He welcomed the allocation of Rs.1.97 lakh crore over the next five years towards the Production Linked Incentive scheme (PLI) to boost manufacturing in India. Harsha Kadam, CEO, Schaeffler Group India, expressed that the budget has the ingredients to deliver long-term growth. The government is bullish on public spending, he added. Parag Satpute, Managing Director, Bridgestone India, mentioned that the scrappage policy for vehicles would lead to increased demand. ACMA, the apex body of Indian automotive components manufacturers, appreciated the budget’s focus health and infrastructure. Its statement read that the vision of ‘Atmanirbhar Bharat’, coupled with the ‘Nation-First’ initiative, will propel the sector towards growth. The statement also underlined initiatives like road infrastructure development, voluntary scrappage policy, impetus on research and development, and PLI among others, as conducive to
strong growth.
Mentioned Udit Sheth, Vice Chairman, Setco Automotive Ltd., that the budget is progressive and focuses on infrastructure and spending. “It would boost the job market and build confidence of the industry,” he added.
Budget for EV players?
As far as EVs are concerned, this budget turned out to be progressive. Said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles, that the scrappage policy would encourage the adoption of greener vehicles. It would also automatically create a push towards electric vehicles, he added. Drawing attention to the setting aside of Rs.2,217 crore for 42 urban centres with a million-plus population for clean air, Gill averred that some of the amount from it could be used to spread awareness about e-vehicles and their ability to contribute towards air clean. Appreciating the government’s plan to strengthen public transport sector under PPP models with an outlay of Rs.18000 crores for operating 20000 buses, Gill said that it would further strengthen the EV industry by acquiring more number of e-buses. Nishchal Chaudhary, Co-Founder & CEO, BattRE, said that there are no direct incentives introduced for the EV industry. The proposed steep increase in capital expenditure will push the growth and induce a higher consumption, which will definitely boost automobile and EV sales, he added. Of the opinion that the expectation of the EV industry to reduce GST on lithium batteries and other raw materials to five-per cent was not met, Chaudhary remarked that the current GST structure is leading to a huge working capital blockage, and is hindering growth.
Expressed Ankit Kumar, CEO, Gozero Mobility, that the voluntary vehicle scrapping policy would incentivise move to new vehicles and more innovative mobility solutions, pushing the EV industry into the limelight. Drawing attention to the allocation of Rs.2217 crore to tackle issues plaguing air pollution, targeting 42 cities with a population of more than a million, Kumar said that he is optimistic about the rise of charging infrastructure and electric vehicles. He also stressed on the National Hydrogen Mission with the proposal to draw energy from renewable. It is an initiative that will ensure the availability of an entire value chain in energy consumption, including EVs, quipped Kumar. Deepak MV, Co-founder and CEO, Etrio, averred that the budget demonstrates the commitment by the government to boost demand and generate employment through investments in areas like infrastructure, finance, and healthcare. Extending support to start-ups and MSMEs through tax exemptions and increased coverage of small companies’ threshold, the budget, from the auto industry standpoint, takes soft steps in the right direction through measures like voluntary scrappage policy, he added. Stressing on the allocation of Rs.1.97 lakh crore towards PLI along with custom duty increase on components, Deepak said that domestic manufacturing will get a fillip. The EV industry, he quipped, could have got more support with the mention of charging infrastructure development and moderation of inverted GST tax structure. N Nagasatyam, Executive Director, Olectra Greentech, said that the allocation of Rs.4,400 crore towards promoting clean air in the cities with more than one-million population and steps to close the thermal power stations surpassing the permissible emission limits, reaffirms Government’s commitment towards curbing the pollution. “The allocation of Rs. 1.7 lakh crore will help in better transport infrastructure offering a comfortable travel to the commuters across the country,” he added.
Budget for transporters?
The road transport industry did not find any mention in the budget despite it asking for relief and hand holding post what is described as the world’s most stringent lockdown at the beginning of the current fiscal. Averred K. Satyanarayana, Co-founder & Director, Ecom Express, that he is happy to see the government’s commitment towards ensuring smooth logistics services by creating an outlay budget for national highway projects to the tune of Rs.1.18 lakh crore of 8,500 km by March 2022 and an additional 11,000 km of National Highway Corridor. “This impetus on infrastructure and logistics will help to boost the economy,’ he added.
Welcoming the continued focus of a digital India with the introduction of an Rs.1,500 crore scheme on digital payment, Satyanarayana said that it would help smoothen the customer interface for logistics companies like theirs. Pushkar Singh, Co-founder & CEO, Lets Transport, said that the voluntary vehicle scrapping policy announcement is welcome and will result in more sustainable and better logistics. The allocation of Rs.1.18 trillion and an announcement of over Rupees-two trillion worth of highways in four states will aid smoother logistics and transport, he added. Averred Rhitiman Majumder, Co-founder, Pickrr Technologies, that the infusion of money for road development in four states is a welcome move for smoother and faster logistics movement. “The move will further ensure greater connectivity in tier-2 and tier-3 cities,” he added. Avinash Raghav, Co-founder & MD, Shift Freight, said that the new economic corridor to boost road infrastructure and the decision to award 13,000 km of roads under the Bharatmala Mala project are good moves by the government. “Not only will this create better connectivity, it will also add to job opportunities at the grass root level,” he added.
