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Finance Minister, Nirmala Sitharaman announced the Union Budget 2021 today (1 February) for the upcoming financial year. The Union Budget 2021 includes the much-anticipated vehicle scrappage policy, which the Indian auto industry welcomed. The new policy will promote the purchase of newer vehicles, while also reducing pollution levels.
Post the announcement of the Union Budget 2021, here is a compilation of some of the reactions from various brand heads in the automobile industry.
Ashish Gupta, Brand Director, Volkswagen Passenger Cars, said:
"The Budget 2021 as announced by the Hon'ble Finance Minister has the potential to revive the economy at large. The focus on the six pillars, with greater impetus on healthcare, infrastructural & connectivity development and rural economy will have a positive impact on the businesses."
"With respect to the auto sector, an increase in customs duty on certain auto parts would impact the input cost, although we're yet to assess the financial impact. On the voluntary scrappage policy, strict governance on the fitness test would determine the benefit on the environment and pollution reduction."
Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor, said:
"Faced with the challenge of delivering rapid, inclusive, economic growth with a heightened focus on health and welfare in an environment of economic contraction and a sharp increase in fiscal deficit due to COVID, the Hon'ble Finance Minister has struck a remarkable balance between growth and fiscal prudence by setting pragmatic revised targets and glide path for fiscal consolidation."
"The emphasis on capital expenditure and infrastructure creation is sought to be largely realized through borrowing and asset monetization without resorting to any significant increase in taxation."
"The privatization of banks, the higher ceiling on foreign direct investment in the insurance sector, zero-coupon bonds for infrastructure, tackling the bank non-performing assets through a combination of an asset reconstruction company and an asset management company are all ideas that will stimulate growth.
"The budget makes a bold statement for a growth rate beyond Pre-COVID levels and renews the government's commitment to minimum government and maximum governance."
He further mentioned, "From an auto industry perspective, the long-awaited voluntary Scrapping Policy can help take older vehicles off the roads thus contributing to lower fuel consumption, pollution as also generating additional demand for cleaner new vehicles. The auto sector welcomes this announcement and is hopeful that for realizing full benefits there will be an early and full implementation of this policy."
"Further, at Toyota Kirloskar Motor, we have continuously worked towards creating a self-reliant and competitive local manufacturing ecosystem and are eagerly looking forward to the details of the Production Linked Incentive scheme that can potentially make India a part of the global supply chain for both traditional and advanced automotive technologies."
Gurpratap Boparai, M.D., Škoda Auto Volkswagen India Private Limited, stated:
"The union budget for 2021-22 presented by Honorable Finance Minister Smt. Nirmala Sitharaman augurs well to create capacity for developmental and growth in the country. Increased outlays in the road sector, infrastructure development and introduction of the voluntary vehicle scrappage policy will not only create a safer and environment-friendly auto sector but also drive replacement demand in the sector."
"The support announced for the rural economy and farm sector will be a big boost for wealth creation in the non-urban markets and increase the scope for auto demand in these regions. While further details of the prior announced PLI scheme is awaited, the same is expected to help the Indian auto industry to improve production efficiency and become self-reliant - atmanirbhar."
Boparai, also mentioned, "It is important to keep in mind that even in the coming financial year, the passenger vehicle market is unlikely to reach the level of 2018 and the much-required rationalisation of GST and cess to aid the auto industry was missing."
"Additionally, the increase in customs duty on certain auto parts to 15% will further increase input costs and prices for cars which depend on specialised components which cannot be manufactured locally due to unviable volumes."
Vinkesh Gulati, President, FADA (Federation Of Automobile Dealers Association), said:
"FADA is happy to note that the Hon'ble Finance Minister has finally announced the much-awaited Scrappage Policy, though voluntary to phase out old vehicles. If we take 1990 as the base year, there are approximately 37L CVs and 52L PVs eligible for voluntary scrappage."
"As an estimate, 10% of CV and 5% of PV may still be plying on the road. We still need to see the fine prints to access the kind of incentives which will be on offer and thus have a +ve effect on retail."
He further added, "The 6,575 km Highway works proposed in Tamil Nadu, Kerala, West Bengal and Assam and another 19,500 km work for Bharat Mala project will definitely add fillip to much-needed revival of Commercial Vehicles especially M&HCV segment."
"Government's reduction of customs duty on steel products to 7.5% will benefit Auto OEMs. We hence expect the benefit to trickle down to end customers thus helping in boosting demand."
"While we expected disposable income for individuals to increase with the enhancement of IT slabs and depreciation benefit on vehicles for individuals, the same has not been taken into consideration."