Exactly two weeks away, the 2021 Union Budget on February 1 will have companies, consumers and companies all ears and eyes to Finance Minister Nirmala Sitharaman. For a country battered by a prolonged economic slowdown, harangued by the Covid-19 pandemic and beleaguered by job losses galore, multiple demand boosters are the need of the hour.
In fact, it is understood that Sitharaman has promises a “never-before” like Budget in 2021 designed to enable India to become a manufacturing growth engine. It’s a statement that has got industry all agog but what is India Automobile Inc’s wishing for?
Speaking at Autocar Professional’s webinar, ‘Taking Stock’ on the outlook for the automobile sector for 2021 and beyond, industry veterans were unanimous in their demand for steps and measures that can help revive demand and eventually pave the path for a resounding recovery of the sector.
Shashank Srivastava, executive director, Marketing and Sales, Maruti Suzuki India, commented, “Any steps to reduce the cost of acquisition of PVs will help. Reduction in road taxes/registration taxes will help. Any step that helps revival of economic growth and GDP will help the passenger vehicle segment.”
Srivastava added that, “Lucrative financial schemes and plans can add to the increased purchase power of consumers. Government has to look at the additional cost involved with regulatory changes and postpone introduction of new norms accordingly, till the industry comes to a certain level.”
The commercial vehicle segment, considered to be the yardstick to measure the country’s growth trajectory, is also pinning its hopes on the infrastructure allocation as this will boost the demand for M&HCVs and tippers. Girish Wagh, President - CVBU, Tata Motors, said he is looking for, “steps that could lead to demand for M&HCVs and also consumption.” He listed out that sector, “will look closely for infrastructure allocation and financial packages being offered in the Budget. Productivity linked incentive schemes and scrappage policies are the other key steps that we are expecting from the Budget and will lead to CV growth.”
Bringing in a perspective from the two-wheeler and three-wheeler segments, Diego Graffi, MD and CEO, Piaggio Vehicles echoed the overall industry sentiment when he said that he is, “Looking for concrete and actionable steps to help auto sector growth and demand. Don’t expect any GST cut in Budget.”
Even Vinkesh Gulati, president, FADA ruled out any further cut in GST rates, “Don’t expect a lot of GST support from the Budget. Expect measures that can help revive demand. We have requested benefits for escalated depreciation rate of vehicles for individual to help improve demand."
Scrappage policy finally?
Though the four industry stalwarts were almost unanimous in ruling out further GST cuts, they are rather hopeful about the long-awaited Vehicle Scrappage Policy seeing the light of the day in the 2021 Budget. In fact, it ranks among Diego Graffi’s top expectations from the annual financial exercise.
According to Shashank Srivastava, the “Scrappage policy is a huge opportunity for OEMs. It will, no doubt, be good but we need to see the fine print to determine its exact impact. For Maruti Suzuki, it means replacing over 90 lakh vehicles, from BS II to BS IV involving 46 lakh BS II cars, 34 lakh BS III and 22 lakh are BS IV vehicles.”
Girish Wagh pointed out that there is, “There is a need to use the scrappage policy to remove unsafe and higher polluting vehicles from the system. However, we need to assess the contours and the fine print of the scrappage policy to understand its exact impact in terms of fresh demand.”
Vinkesh Gulati signed out on a hopeful note that, “Scrappage policy could also help revive demand. Sentiment is improving. Hope the Budget helps retain the positive sentiment and boost purchasing power.”
All eyes now on February 1 when the Finance Minister will announce the Budget. At Autocar Professional, we will keep you updated with all the key developments and announcements specific to the automotive sector.
Approval for vehicle scrappage policy likely soon: Nitin Gadkari