Vinod K.Dasari, Managing Director, Ashok Leyland says there are three themes in Union Budget 2015 that are critical to auto industry. Focus on infrastructure lays the roadmap for over 100,000 km of roads targeted over and above a massive push in rail sector. Clean India campaign warrants discontinuous investments in public amenities. Infra boost stands at Rs 70,000 crores spending. Mechanisms around infra funding will set off a virtuous cycle, thereby resulting in significant primary demand for commercial vehicles.
Union Budget 2015 focus on grassroots entrepreneurship points to MUDRA bank, formed to refinance MFIs, and Jan Dhan – Aadhaar- Mobile programme. Both are directed to give growth to grassroots entrepreneurs. The formal banking system gives the poor access to lower cost finance, especially when overdraft facilities make it to Jan Dhan accounts. such entrepreneurs require low cost transport, and further development will boost development for small commercial vehicles.
Reform measures see the introduction of a new bankruptcy law, roadmap to lower corporate taxes over the next 4 years, and added tools directed at making India more competitive to conduct business. The pro growth and business direction will encourage more players to enter India to improve investments and economic activity.
Union Budget 2015 did not consider excise duty modification in the automotive sector. Dasari believes long term demand creation is more sustainable than short term sops to boost consumption. Indian government has moved forward in creating demand in this budget. Government looks to drive small, incremental improvements rather than big bang reforms.
Ashok Leyland sales for February 2015 stands at 10762 units (PY 7915 units), equating to 36 pct growth. M&HCV sales was reported at 8230 units (PY 5576 units), equating to 48 pct sales growth. LCV sales growth stood at 2532 units (PY 2339 units), equating to 8 pct sales growth.