SIAM welcomes Budget 2013: GM India not happy

SIAM welcomes Budget 2013S Sandilya,  Chairman, Eicher Motors Ltd – Unit Royal Enfield is also the President of SIAM. He has stated that they cannot have any complaints from the Budget 2013, as under current circumstances, this was the only possible output. In Budget 2013 for Indian auto industry, the finance minister has tried to balance the need for growth with fiscal compulsions, adds SIAM.

SIAM says, “While there are several innovative proposals, the auto industry had expected that the Finance Minister would come out with more specific roadmap for implementation of Goods & Services Tax (GST). The industry would be keenly looking forward to full implementation of GST at the earliest. SIAM appreciates the Finance Minister’s gesture of allocating double the funds under JNNURM scheme enabling substantial part for purchase of upto 10 thousand buses.This was very much needed for revival of CV sector. Finance Minister has also accepted SIAM recommendation to lower excise duty on commercial vehicle chassis from 14% to 13% which was raised in the last budget and led to significant drop in off-take of chassis by the body builders.”

SIAM had also requested the FM to reduce the excise duty on passenger cars by 2%, but it has not been entertained. On the other hand, FM has has accepted SIAM’s recommendation on extension of concession for import of electric and hybrid electric vehicle parts till 31st March 2015.

As far as FM’s announcement for increase in import duties for completely built units of cars and motorcycles is concerned, SIAM says that this move will promote locally built units. SIAM was not happy with the increase in excise duty of SUVs as this was the only segment that did exceptionally well in the past year. Increasing prices of SUVs might slow down sales.

Just like Audi and Ford, GM India too has expressed its disappointment with Union Budget 2013. In a statement released by Lowell Paddock, Head, GM India, states, “The budget is encouraging due to its focus on agriculture, irrigation, education, skill development, health care and infrastructure. Since it addresses some of the concerns of the industry in general, it should help economic growth going forward.

As far as the automotive industry is concerned, the budget did not meet the expectations. We were expecting the roll back of the excise duty imposed last year. Instead there is an increase of 3 per cent excise duty on SUVs and there is also a hike in customs duty of 25% on high end imported vehicles. These hikes are not on the expected lines and will impact the sale of SUVs. Having said this, we have to see the fine print to understand the clear definition of SUVs. The automotive industry is one of the growth drivers of the economy with its backward and forward linkages to generate multiple and substantial employment opportunities any duty concessions would have helped the industry to register some growth as the industry has already started slowing down due to high interest rates, fuel prices, commodity prices, negative market sentiments etc. Some concessions announced for electric vehicles and increased allocation for the road transport sector are welcome decisions.

Some of the other announcements made by the finance minister for manufacturing, R&D activities, regulatory authority to monitor road projects, focus on skill development etc should enhance the competitiveness of the Indian industry. The intention to further promote the development of infrastructure, particularly in rural areas, is a positive step. The government’s commitment to continue with its reform process is likewise a positive step.

Similarly, the investment and demand stimulating measures in manufacturing especially the investment allowance for two years, purchase of buses under JNNURM, movement on GST and some positive action on industrial corridors are also welcome decisions. These proposals, if implemented effectively, should have a positive impact on industry and the economy as a whole. The challenge now is the implementation of the proposals. Our hope is that the market will respond favorably.”