Budget 2014 reactions from the automobile industry
The Indian government has just announced the 2014-15 budget. In the automotive context there wasn't much to it, except that the excise duty benefits passed on by the ousted party stay put till December 2014. The new government though promised better roads and infrastructure which again is directed at villages and north-eastern states. Additionally, work is to begin on select expressways. The automotive industry has been sending us their reactions to the budget. Let's take a look at their responses to how Arun Jaitley's plan affects them. Fresh reactions will be updated here as and when when we receive them.
Arvind Saxena, president and managing director, General Motors India
"The budget looks to be a reform oriented one as it focuses on infrastructural development, education, skill development, agriculture, irrigation, health care etc. Given the condition of the economy, the direction given in the budget is a positive one and the call for fiscal prudence is a welcome move. The corporate sector was expecting a timeline for the roll out of GST. But the government's intention to introduce CenGST and also the DTC after review are very encouraging news. The steps outlined for the manufacturing, power, coal and mining sectors should spur economic activity going forward. Having said this, a monitoring mechanism should have been in place to ensure timely implementation of the projects in these sectors."
"As far as the automotive industry is concerned, the focus on rural roads, highways and expressways are welcome decisions. Some of the other announcements made by the finance minister on the taxation front are also positive steps. These proposals and announcements made in the budget, if implemented effectively, should have a positive impact on industry and the economy as a whole going forward. The challenge now is the implementation of the proposals. Our hope is that the market will respond favourably."
Joe King, head, Audi India
"We expect the steps announced by the finance minister to lead to an improvement in economic sentiment which will in-turn benefit the automobile industry in the long term.
The decision to extend the cut in excise duty till December 31 announced earlier also augurs well for the industry.
We welcome the announcements related to infrastructure growth such as development of 100 smart cities and rural roads development. Also, the auto industry will be one of the beneficiaries of increased savings due to direct and indirect tax proposals."
Kenichiro Yomura, president, Nissan India operations
"The Budget 2014 presented today by the honourable finance minister is based on fiscal prudence with a progressive outlook. We appreciate his considerations and his aim to achieve 7-8 per cent GDP in 3 to 4 years. Structural reforms, including FDI liberalisation in defense and insurance, initiatives to support local manufacturing and commitment to remove retrospective taxation, are significant steps from a larger macro-economic perspective.
The previous financial year was challenging for the auto industry and we were expecting bolder reforms in favour of the auto industry. Though the earlier decision to continue the excise duty concession till December 2014 along with the reduction in steel prices and elimination of customs duty on auto components certainly bodes well for the sector. The union government's intent to move towards a GST regime is good news and we hope it is implemented at the earliest. The industry really needs a robust and streamlined indirect taxation structure that will lend customers the confidence to spend more owing to the taming of prices. This should have a positive impact on car shopping as well. In addition to the Government's willingness to give a fillip to the Indian auto industry, we were expecting a move towards making green vehicle technology a reality so that we could get the opportunity to bring our world-class electric and hybrid vehicles to our Indian customers' doorstep."
Pawan Goenka, executive director, Mahindra and Mahindra
The finance minister has delivered a well defined and prudent budget with specific focus on infrastructure, manufacturing and rural schemes. To view it in the macroeconomic perspective, it has laid clear emphasis on supporting investment. Though there were no big bang announcements, the intent of the budget is clear. It is a move towards the right direction and there is an attempt to put a lot of placeholders through the various Rs 100 crore schemes. In fact, I see this budget as a blueprint to the direction the government will take over the next nine months.
A Ramasubramanium, president, AMW Motors
"The measures for development of infrastructure development like highways, industrial corridors, housing, manufacturing , FDI in the defence sector and power projects are welcome and will contribute to demand generation for commercial vehicles, which have seen record lows in recent years. The finance minister's announcement for tax holidays for infra projects with long gestation periods will encourage more entrants into the sector. The budget has attempted to address issues in several sectors of the economy, but the industry will pin its hope on implementation, which has been an issue in the past."
Vipin Sondhi, MD and CEO, JCB India
"Given that this government has been in office for less than 2 months, no big bang reforms were anticipated. The union government recognising the need for revival of investment cycle had already extended the excise duty cut on capital goods for another six months in June, 2014 itself. The budget's focus on infrastructure sector, encouraging banks to lend long term funds to infrastructure sector, extending the benefit of investment allowance to small and medium enterprises and emphasis on manufacturing growth should help revive the capital goods sector. While PPP in relation to many new projects has been announced, however, a roadmap for execution of existing held up projects could have helped turn things quickly."
Harish Lakshman, president, ACMA
"We are glad that the hon'ble finance minister has unveiled a pragmatic budget with adequate focus on development of the social sector as well as that of the industry and infrastructure. ACMA also welcomes the announcement of the intent for implementation of GST and DTC at an earliest, as well as measures to encourage the Micro, Small and Medium sector (MSMEs) including revision of its definition. MSMEs constitute over 70 per cent of ACMA's membership and scaling-up has been a challenge for the sector."