Budget 2022: Auto Inc Upbeat

The captains of India’s automotive sector responded to Budget 2022 -

Kenichi Ayukawa, President, SIAM said “The 35 percent increased Capex outlay, major infrastructure projects like 25,000 km road construction, 100 cargo terminals, Project Gatishakti, 5G network, optic fibre cable laying and the recent PLI schemes are major positives. Leveraging Biomass and support to ethanol blending for both environment and economy gains could unlock the power of India’s rural economy. Steel price cooling off measures will help the entire manufacturing sector. Impetus to charging infrastructure and energy storage systems and government support in R&D for clean energy, green mobility and semiconductors will help the auto sector.”

Pawan Munjal, Chairman & CEO, Hero MotoCorp said, “One of the landmark announcements of this Budget is the battery swapping policy, which has the potential to be a game-changer in catalysing the migration to EVs. While the scale of its impact will be clear upon formation of the policy, the industry is committed to sharing its insights and expertise with the Government to make this a reality. The continued focus on infrastructure will not only improve the quality of lives and generate jobs. Addressing the concerns of the MSME sector, the ECLGS Scheme has been extended will help credit growth for NBFCs as well as enable recovery of existing exposure from this sector.”

Venu Srinivasan, Chairman, TVS Motor Company: “The strong push towards augmenting agricultural productivity should help enable buoyant rural demand.  In the electric mobility space, we strongly support the measures undertaken by Government to promote clean and green mobility, mainly introducing the battery-swapping policy will be instrumental in supporting an efficient EV ecosystem. There is an impactful thrust towards renewable energy incentives with an increased focus on reducing infrastructural waste for a greener tomorrow.”

P B Balaji, Group CFO, Tata Motors: “The robust increase in capex by 35.4 percent to Rs 7.5 lakh crore and a comprehensive investment plan for infrastructure is a significant growth booster. Additionally, the launch of the well-conceived PM Gati Shakti program for multi modal transport including 100 cargo terminals and investments in 25000 kms of highways, apart from investments in ports and metros is an excellent development. This will reduce logistics costs and transit times, increase employment. Additionally, plans to create EV charging infrastructure including national policy for battery swapping which when combined with the already announced Automotive PLI scheme, furthers the agenda for green mobility.”

Sunjay Kapur, President- ACMA: “The Budget also sets the ground for creation of urban fossil fuel-free zones, policy for battery swapping and energy as service and incentives for creating a vibrant start-up ecosystem, allowing India to emerge as a forerunner of green mobility solutions for the world.”

Baba Kalyani, CMD Bharat Forge said: “The proposed new legislation for SEZs with states as partners coupled with heightened emphasis on the seven engines under PM GatiShakti initiative should pave way for a new India that is recognized for its speed, productivity and scale. Exclusive policy on battery swapping, special mobility zones and incentivising clean-technologies in public transport should lead to accelerated adoption of EVs across the country. The increased outlay towards manufacturing of high efficiency modules for solar power and strong emphasis on circular economy transition reinforces India’s commitment to global climate action and sustainable technologies.”

Nishant Arya, Vice Chairman, JBM Group: “This is an investment focussed budget aimed at creating India@100. JBM Group welcomes the government’s move towards promoting electrification of vehicles by proposing the Battery Swapping policy which also includes the concept of Energy and Battery Storage as a Service. This is going to intensify the deployment of an extensive network of EV chargers, thereby, boosting the end-to-end EV ecosystem pan India. However, bringing the EV financing under priority lending could have bought about the much needed liquidity into the EV sector, which has been missed in the budget this year”. 

Aakash Minda, Executive Director, Minda Corporation said, “Dubbed the 'booster dose budget' in some quarters, some of the measures like Capex of around Rs 7.5 lakh crore, PM Gati Shakti projects and focus on making India more Atmanirbhar will certainly offer a shot in the arm for the manufacturing industry. Furthermore, announcements such as the battery swapping policy and the push for clean tech and electric vehicles will further spur the growth of the EV industry while also acting as a catalyst for jobs among the youth.”

Venkatram Mamillapalle, Country CEO & Managing Director – Renault India 

Budget 2022 spells seamless growth for the auto and auto ancillary industry in India. The government’s focus on ‘Aatmanirbharta’ will continue to provide impetus to build domestic capacities and push the agenda of ‘Vocal for Local’. The government’s focus on Battery Swapping policy to be brought with inter-operability standards and push for clean tech and electric vehicles will create the right ambient environment for EV introduction, and overall harmonisation of the electric mobility aspirations of the nation. The government has laid emphasis for the development of the infrastructure that will further help build capacities for the resurgence of the automotive sector in India, and envisages Rs 20, 000 crore investment outlay in infrastructure projects, under the auspices of PM Gati Shakti. The National Highways network will be expanded by 25,000 km in 2022-23. Better roads will have a certain positive impact on the automotive sector.  Finally, the government’s decision to strengthen the rural economy through a MSP payment of Rs 2.73 lakh crore along with other benefits to help the farming sector will help increase disposable incomes, and help meet the aspirations of rural and semi-urban markets of India for personal mobility.

Vinkesh Gulati – President, FADA said, “There is a clear emphasis on creative, sustainable & innovative business models. Battery Swapping & Energy as a Service (EAAS) will surely help accelerate the transition towards Clean Mobility. The development of special mobility zones for electric vehicles and promoting clean technology for public transport validate government commitment to E-mobility, which would boost confidence in the EV industry. The rural India has generally been the key driver for entry level passenger vehicle segment & two-wheeler space. With government plans on Rs 2.3 lakh crore direct payment as MSP to farmers, it will work as a booster for two-wheeler, Tractor & entry level PV sector sales. However, an additional duty of rupees 2/ litre on unblended fuel from October 2022, could play a spoilsport for the already stressed two-wheeler industry.”

Harsha Kadam, MD and CEO, Schaeffler India, “Measures such as higher infrastructure spends, expansion of the highway network, addition of modern trains and a focus on the rural economy will have positive long-term impact on the manufacturing and mobility sector. The reforms to do away with old clearance systems will make it easier to business in India and it is likely to unlock a fresh wave of investment. The focus on cleantech, policies on urban planning, battery swapping etc are a clear direction towards much-needed steps to meet the long-term sustainability targets. The policy push with the right levers of PLI scheme is likely to further spur the development of the entire EV ecosystem in the country.” 

Vikramadithya, Gourineni, ED, Amara Raja Batteries, “The policy provides several drivers to the ecosystem of mobility startups engaged in Battery or Energy as a service business models. It will be interesting to see what sort of interoperability standards are introduced with the thrust on battery swapping. While battery swapping can play a pragmatic solution for India’s electric mobility needs, there is also merit in introducing higher safety rated battery packs compatible with faster charging.”

Anil Kumar, president and MD, SEG Automotive India, “The focus on inclusive growth should support the Indian economy to continue to grow stronger. The announcements related to battery swapping policy highlights the focus towards sustainable mobility and can improve the demand in the growing EV segment. Offering energy as service and battery swapping can lead to new innovative business models, making electric mobility more attractive on TCO, by reducing the acquisition cost of the vehicle. The robust allocation of capital expenditure is a good sign for the infrastructure, manufacturing and commercial vehicle sector. The credit schemes for the MSME, and reduction in duties for a few commodities is a much-needed move, for the industry to stay competitive, at a time when the commodity prices are increasing.”

Shohab Rais, COO, Indian Chemical Business, Tata Chemicals, “The government this year is very clear on its move towards enabling energy transition through provisions for boosting domestic manufacturing of solar power equipment and batteries, in line with India's larger global commitment of tackling climate change. The government’s major allocation is towards focusing on the growth of grid-connected energy storage and supporting incentives for green bonds. The budget is very well thought through in terms of enhancing domestic value addition by reducing customs duty on certain critical chemicals namely methanol, acetic acid, and heavy feedstocks for petroleum refining, while duty is being raised on sodium cyanide for which adequate domestic capacity exists. Also, PM Gatishakti and specifically, focus on waterways, ports, roads, and railways, coupled with the proposed unified logistics’ interface platform will help improve supply chain efficiency and reduce logistics’ costs across sectors.”

Raghu Gullapalli, MD, Lead - APAC and Middle East for Industrial & Mobility, Accenture, “The intended introduction of a Battery Swapping Policy is a welcome move as it could encourage stakeholders in the value chain to devise innovative business models which reduce the lifestyle cost of EVs. This combined with the focus on interoperability which will help address ongoing range and battery depletion concerns, could boost EV adoption in the country."

Vinod Aggarwal, MD and CEO, VECV, “We welcome the long-term focus in the budget on infrastructure and logistics development and modern vehicle technologies. The commercial vehicle industry will benefit as trucks will play a key role in infrastructure development proposed under the PM Gati Shakti Plan, construction of highway network and other infrastructure projects. This in-turn will pave the way for modern trucks and buses to operate efficiently on Indian roads. Initiatives in the budget that strengthen the rural economy will further improve vehicle buying sentiment for a diverse range of passenger and commercial vehicles.  EV battery standardisation and the formulation of new interoperability standards will facilitate development of the EV ecosystem -particularly in the two-wheeler and last-mile delivery segments.”

Martin Schwenk, MD and CEO, Mercedes-Benz India, “This Budget is overall growth oriented with a clear focus on digitisation, electrification, infrastructure development and ease of doing business; aiming to propel a long-term growth of the Indian economy. The battery-swapping announcement is in the right direction and will be helpful to a limited segment. We however need a broader holistic view on the strategy around developing electric mobility for the passenger vehicle segment. A mid-to long term planning for demand creation is needed and we hope the fine prints will have ripple effect and passively stimulate growth for the auto industry.” 

Dheeraj Hinduja, executive chairman, Ashok Leyland, “The Finance Minister has presented a growth-oriented and pro-development Budget for 2022-23 by focusing on sustainable planning & development, energy transition for a cleaner tomorrow and inclusive growth through a tech-enabled economy. Also, investment led growth strategy and the sizeable capital investment for sustained and speedy economic revival are reflected in the sharp increase in capital expenditure for FY23. The special focus on education, digital and clean mobility is laudable. The Battery Swapping policy and special EV mobility zones will help in the smooth transition to electric vehicles. The budget has laid the roadmap for long-term development over the next 25 years and areas like AI, drones, semiconductors, space economy, genomics, green energy, and clean mobility systems will collectively lead the future growth of the economy.”

Satyakam Arya, MD & CEO, DICV
Fundamentally, the FY 2022-23 budget focuses on providing growth to the economy. We have already started to see some green shoots in economic recovery and, therefore, a budget focused on that is a welcome step. Some other welcome measures are the 35.4 percent increase in capex outlay to Rs 7.5 lakh crore, the high-level fiscal target of 6.4 percent for 2022-23, a sharper focus on building road infrastructure and logistics, and a bigger push towards e-mobility are big boosts for the economy.

 The measures announced to boost the road infrastructure and Logistics sectors that should keep the CV sector on a positive trend this financial year. The 25,000 km expansion of the national highway network, multi-modal national park contracts and the 100 GatiShakti terminal contracts should generate greater demand for CVs in FY23 as well as FY24. FY22 was a recovery year for DICV and we did anticipate that FY23 will be positive for us and it seems to be, taking references from the FY23 budget. It is also heartening to see a greater thrust towards improving the logistics efficiency based on digitalization, creation of multimodal logistic parts and cargo terminals. This will provide much needed and enhanced cost competitiveness to the entire manufacturing sector. The FM’s comments on battery swapping and interoperability is certainly the right direction to take. We will however, need to look at the GST rate for charging and swapping as a service going forward. The indication that unblended fuel will attract additional duty of Rs. 2 per litre may put pressure on the current auto industry environment, and at the same time will hasten the transition to blended fuels.  

Kavan Mukhtyar, partner and automotive leader, PwC India, “The PM GatiShakti National Master Plan that focuses on multi modal connectivity will reduce logistics cost and improve transport network. This will have an indirect impact on the CV industry with a positive impact on Heavy Trucks and light commercial vehicles. Additional excise duty of Rs 2/ litre on unblended fuel to be imposed from October 1, 2022. This will encourage blending of fuel and we expect OEM’s to further invest in clean and blended fuel engines. Overall, it is a capital expenditure-oriented budget which will lead to demand generation in the long term for the automobile industry. This along with already announced policies such FAME, PLI schemes for Auto and ACC batteries will accelerate India’s transformation towards clean and green mobility.”

Amit Chadha, CEO and MD, L&T Technology Services, “Digital Engineering is the future and steps taken today will shape the country’s journey ahead on this. And the announcements under Union Budget appear to precisely embrace this proactive approach as the fundamental impetus has been on leveraging digital technologies to further the nation’s growth and march ahead. As a pure-play ER&D services provider, our belief is that such a mass scale enablement of the digital ecosystem will also result in complementing uptake of digital engineering capabilities resulting in the country maintaining its strong hold as a global preferred destination for engineering services.”

Sanjay Thakker, chairman and founder, Group Landmark, " The decision to engage in major infrastructure investments with an emphasis on the rural economy will boost automobile businesses in the long run. Commercial electric vehicle (EV) manufacturers will profit from announcements such as the battery swapping policy, and this is likely to add confidence to potential passenger EV buyers too. The automobile component players will likewise get access to a new source of revenue and a completely emerging business sector where they can participate. The move to open up defence R&D to private businesses might pave the way for new development opportunities for Indian automobile component manufacturers."

Unsoo Kim, MD, Hyundai Motors India, “Government’s strong approach towards accelerating infrastructure development, sustainability along with digitalisation in every-sphere of business will give strong impetus to overall economy while empowering consumerism in India. The vision for clean mobility creating electric vehicle ecosystem is a positive indicator for auto Industry and for its large supply chain. The forward-looking budget will lay modular economic structure for every section of business and society in India.“

Nitin Gupta, Founder, Attero Recycling, “Taking into cognisance the constraint of space in urban areas for setting up charging stations, a battery swapping policy has been proposed. It has also been announced that the interoperability standards will be formalised soon. These steps will not just have a positive impact on the existing players but will also encourage new players that are planning to foray into the segment. We also welcome the government’s decision to issue sovereign Green Bonds in public sector projects to reduce carbon footprint in the economy. The budget also lays emphasis on transitioning towards a circular economy and touched upon lithium-ion battery recycling and electronic waste management.”

Sandeep Kalia, MD, Valvoline Cummins, “With the budget announcement completed, we can see the emphasis on this year's budget on wider adoption of electric vehicles for public as well as private use. While there are no immediate implications for the commercial automobile industry, the budget surely helps boost the EV segment that will help redefine the automobile industry in the medium to long run. With battery swapping being at the core, this year the aim is to increase EV battery production and development which will provide incentives to the private sector. This will help the auto lubricant industry in India to enter the EV markets as adoption and infrastructure will improve leading to more EVs on the road.”

Rajeev Sharma, chief strategy officer, Mitsubishi Electric India, "This is a growth-oriented Budget, I am sure that stepping up the capital expenditure sharply by 35.4% will have an incremental effect on the overall growth of the economy. It is good that the policy makers understand that nearly half of our population is likely to be living in urban areas by 2047, when India is at 100. The announcement for urban capacity building like mass transit, planning help, etc. would act as a good principle for development of the country. The budget has demonstrated a good balance between today’s needs and the future’s demand."

Kamal Bali, President & MD, Volvo Group, India, "The budget’s focus on logistics will help solve supply-side challenges and curb structural inflationary challenges. Public transport, urban infrastructure push, and inter-operable battery swapping policy are big positives. Extension of ECLGS credit guarantee to MSME and hospitality sectors is a welcome step. Great to hear the mention of sustainable solutions in public procurement policy with due credence to clean & green tech, quality, and cost (instead of simply L1 approach). The capex of Rs 7.5 lakh crore (if implemented with speed) will have a huge multiplier effect on jobs and will further kick in a virtuous cycle of consumption growth. Finally, the digital rupee is in the right direction. Thankfully, no major negative surprises in this purposeful budget."

Nagesh Basavanhalli, Group CEO & MD, Greaves Cotton, "The Budget has some important announcements to accelerate economic growth by focusing on 4 core pillars of productivity, climate action, financing investment and PM Gati Shakti Programme which will help strengthen our infrastructure and MSME sector. The expansion of the National Highway network will provide better connectivity to our towns and cities and strengthen the supply chain network. Digital ecosystem for skilling and livelihood through online training is a step in the right direction as this is a critical need of the hour by the industry. From the auto and EV sectors’ point of view, the battery swapping policy will boost the adoption of EV. Further, the government’s move to encourage the private sector’s involvement to create sustainable and innovative business models for battery and energy as a service, too, will be a game-changer for the growth of the entire EV ecosystem of the country.”

Sanjay Gupta, VP and India MD, NXP Semiconductors, “The Union Budget 2022 has recognised the digital growth of the country as a primary focus. In order to promote cleaner mobility, the battery swapping policy and interoperability standards that government plans to introduce, incorporates the concept of energy/battery as a service. This will also help in developing the charging station ecosystem which is imperative for massification of EVs. The announcement will give impetus to the private sector to develop sustainable and innovative business models for battery and energy as a service.”

Nandita Tripathi, partner and Tax Sector Head- ENR, KPMG India, “Budget 2022 is directionally good - signals policy stability, is growth oriented and strongly inclined towards a favourable investment ecosystem. The launch of battery swapping policy not only encourages private sector participation in the electric charging segment but also provides much-needed fillip to electric vehicles manufacturing and use. The benefit of lower tax rate being extended for manufacturing companies for one more year will provide more room for EV manufacturing in a cost competitive environment. Further, use of green bonds for environmental focused projects is expected to boost financing for clean energy. Proposal for inclusion of data centres and energy storage systems in infrastructure definition will open new avenues for such businesses, including monetisation through InvITs. Further, allocation of Rs 19,500 crore for PLI scheme for manufacturing of high-efficiency modules is expected to boost domestic module manufacturing. For the energy sector, overall a ‘green budget’, focusing on long term sustainable development and on the right path for achieving India’s climate goals.”

Narendra Ganpule, partner, KPMG India, “While the budget has more of the same, some proposals certainly stand out for the long-lasting impact they can have. Increasing capex by 35% to Rs 7.5 lakh crore is one of them. India is focused on reviving the economy that has suffered due to pandemic and other systemic lacunae. Enhancing gross domestic capital formation will certainly yield multi-year benefits. While the world is increasingly adopting clean energy, India is almost fully dependent on fossil fuels. Creating nation-wide standards and policies is a great first step to catalyse local industries and bring economies of scale. Though much more was expected on the EV front. Green bonds is another announcement that’s in sync with this theme. Augmenting finances for clean-tech is a great way to channelise the resources in the much-needed areas.”  

Anand Srinivasan, MD, Covestro India, " We all know that plastics integrated electronics, thermally conductive plastics, signal transparency are here to stay as plastic will continue to support organic growth. We have been collaborating with cross-industry players for alternate raw materials, innovative recycling, and joint solution development as a part of our vision to be circular and provide a holistic tool that enables humans to function efficiently. The possible challenge of availability of different skilled workforce aligned to the changing landscape of future mobility will be a challenge that industries will have to collectively tackle to usher in this new era of clean and sustainable mobility, which we wholeheartedly support."