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Impact of Budget on the Auto Sector

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What impact does the Union Budget have on the Auto Sector? What happened in last year’s Budget? What to expect in Budget 2014? View our presentation to get all the answers.

What impact does the Union Budget have on the Auto Sector? What happened in last year’s Budget? What to expect in Budget 2014? View our presentation to get all the answers.

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  • 1. Impact of Budget on the Auto Sector
  • 2. • Tax proposals in the budget generally influence the automobile sector significantly. • For eg: if there is an increase in cost of the car, post budget, there is increased demand for cars before the fiscal end. • This is because, duty increases become effective from the new fiscal. Impact of Tax Proposals
  • 3. • This time things will be different as the budget is being announced during the fiscal. What’s different this time?
  • 4. Here are some pointers that could explain the influence of budget on auto companies -
  • 5. Government’s agenda • To boost manufacturing of automobiles and related parts in India.
  • 6. How can it be achieved? • Offering tax incentives for carmakers in India. • Announcing deductions on investments on plant and machinery for companies upgrading their plants or setting up new plants.
  • 7. Government uses taxation as a tool • To influence consumption, for example: Government may increase duties or taxes on some types of vehicles Car Importsto discourage
  • 8. Government uses Government’s action in Budget 2013-14 • The government hiked excise duty on some of the non-taxi sports utility vehicles, based on ground clearance. • The government allocated more money to urban development and rural infrastructure.
  • 9. Impact on companies • Some impact on companies like Tata Motors and Mahindra and Mahindra which manufacture non-taxi sports utility vehicles in India. • Good news for bus and truck making or tractor making companies like Tata Motors and two-wheeler companies like Bajaj Auto, as rural consumption could have received a boost.
  • 10. Government’s focus for Budget 2014-15 • Expected to be positive for consumption and investment. • Focus on manufacturing. • Talks about boosting urban and rural infrastructure.
  • 11. Which means… • Car and two-wheeler companies listed in India could get incentives to boost production. • Bus manufacturers in India could benefit as a result of a higher allocation.
  • 12. Important terms to watch out for • Excise duty on manufacturing of automobiles or spares, • Customs duty on import of luxury goods or spares • Allocation to Jawaharlal Nehru Urban Renewal Mission. • Fuel subsidies
  • 13. Final note • In a nutshell, the automobile sector will remain a focus area in the upcoming budget and markets are expecting that, there will be an overall positive impact on the sector. • To learn more about the union budget, click here.
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