What Is Indian Automobile Industry Expecting from 2017’s Union Budget?

What Is Indian Automobile Industry Expecting from 2017’s Union Budget?

As today would be the day of release of India’s Union Budget for 2017, a lot of speculations and assumptions have been going around. The automobile industry has their own set of hopes. This industry is one of the grandest employees of the country contributing to about 7% GDP. Following are what the automobile giants are saying about this year’s budget.

Mr. Y K Koo, the Managing Director of Hyundai India expects positive initiatives on the ease of conducting business from this year’s budget. He hopes that there would be some reduction in the excise duty towards GST implementations and the budget would lower income and corporate tax.

All compact A segment and B segment hatchbacks would have a spike in demand. And as over the past decade, the buying pattern has also shifted to the higher segment; the demand for C segment and compact sedans would also increase.

Pravin Shah, Mahindra and Mahindra Ltd.’s President and Chief Ex (Automotive) states that this year’s budget should be a prudent and well-defined budget focusing on infrastructure, taxation, and manufacturing and also provide some rural stimuli to boost investment, business, and consumer confidence.



As one of the most integral parts of automotive industry is research and development and its expenditure is really high because of the emission norms and mandatory equipment for safety. The industry expects that the depreciation rates for expenditure on research should increase. This would also help local outsourcing in light of Make in India campaign.

A vehicle scrapping and fleet modernization policy was being drafted last year. The sales target for the next financial year is higher because of cars that are more than 15 years old being scrapped. This policy should provide good incentives to individuals so that they actually scrap their old car and buy a new one. The industry also feels that if additional focus is given to development and infrastructure of roads and highways in Tier II and Tier II cities and rural areas, their market would tremendously expand giving room for expansion.

Over the years, the government has complicated the structure of excise duty a lot. The dates of the GST regime are also not yet finalised. The automotive industry might have different GST rates this year as different tax slabs might be attracted from different segments of cars and motorcycles.

The interest rates have lowered tremendously due to demonetization as it has injected money back into the banks. India has now become one of the fastest growing economies around the world due to the interest rates lowering and the spending prowess increasing. This will also reduce capital cost for most car makers drifting their funds towards research, development and expansion of the industry.

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