The results are based on the responses from 1700 participants including nearly 650 top executives and 1050 mid management level executives of the auto industry.
According to ETAuto Pre-Budget Survey 2016, more than 69 percent of the respondents said they are hopeful of this budget to bring revival in the automobile industry. More than 19 percent did not believe there will be much change brought about by the budget. The results are based on responses from over 1700 participants including nearly 650 top executives and 1050 mid management level executives of the auto industry.
In order to give impetus to the tepid demand almost 73 percent of our respondent base said that the income tax slab should be increased to Rs 2.8 lakh whereas 16 percent were happy with status quo and are not looking for any change.
With India moving up from being just a cog in the wheel when it comes to global trade, Indian Inc is hoping for policies that will safeguard its interests and offer level playing field. Some of the respondents asked for incentives for increasing export to counter the rising import from China.
Most of the respondents hoped for a development-oriented budget with primary focus on infrastructure development. Nearly half of the respondents said that Finance Minister’s focus should be more on infrastructure. A better infrastructure including improved roads and highways in the country is certain to give a fillip to the auto industry.
The second most important factor that is expected to be addressed through the budget is the rural economy. Two wheeler segment is one of the least performing segments of the auto industry and the reason for this fall in sales has been directly attributed to the poor demand in rural economy. Reduction in taxes on two-wheeler and tractor too were among the proposals for the upcoming budget.
However, the biggest demand, not just from auto industry but from across the verticals, has been for the implementation of the GST. Industry hopes this will help reduce the huge stress on businesses for compliance with multiple state tax legislations.
However, the most emphatic affirmative has been for the need for reduction in excise duty on automobiles. Almost 72 percent of the respondents hoped for reduction in the excise duty on the automobile sector. The excise duty on small cars, mid-size cars less than 1500cc, over 1500cc, and SUV currently stand at 12.5%, 24% and 27% and 30% respectively. This has made automobiles one of the highest taxed commodities in the country.
A long pending request of the auto industry has been for the bringing of scrappage policy. Not only will incentivising scrapping of old vehicles reduce air pollution by automobiles considerably, it will also boost demand for new automobiles. Nitin Gadkari, transport minister had earlier said that the government will build eight scrap recycle centres near ports like Kandla to recycle used vehicles from world over and boost automobile exports which is Rs 2.5 lakh crore at present.
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This should also prove advantageous for many of the auto component manufacturers, most of whom are MSMEs.
One of the pet projects of the incumbent government has been the ‘Make In India’ initiative. A large number of respondents expressed views that to complement the initiative, the government should invest heavily in research & development. “There should be a strong push in the field of R&D along with incentivising companies who are looking to set up their own R&D. This should reduce the import of technology which is expected to be a major component in global trade,” responded a senior employee at a Global auto component MNC.
A large number of respondents also said that the focus on skill development should continue alongside the Make in India initiative.