Budget 2018: Crumbs For Car Buyers, None For Electric Vehicles

Budget 2018 does not provide any specific incentives to switch to electric vehicles or scrap your old car.

I watched Budget 2018 intently, waiting with bated breath for that massive plan outlay for electric vehicles. After all, India plans to go completely electric by 2030, so surely there should have been some impetus. But there was none.

In fact, the entire auto sector got very little mention in Finance Minister Arun Jaitley’s budget speech. If anything, most of the ‘benefits’ to the auto industry are actually indirect, while directly there have been mainly protectionist moves, aimed at boosting local manufacturing and curbing dependence on imports. But for the average consumer, there’s nothing in it really.

Here’s a look at the Budget’s impact on the auto industry, for you as a consumer.

Positive Impact

If you are looking to buy your first bike or scooter, you’ll probably get about Rs 10,000 extra spending cash once this budget comes into effect. The standard deduction of Rs 40,000 for salaried employees may leave you with slightly more disposable income to spend on a two wheeler. Right now, existing deductions (on medical and transport) for salaried employees amount to Rs 30,000 a year anyway.

If you are a farmer or agriculturist, this budget would help you buy a car or bike. How? The Rs 2,000 crore plan outlay for the farm sector and the hike in minimum selling price for kharif crops means that you will have a little more cash in hand to spend on a vehicle.

The farmer is a key component of the value chain and keeping his interests at the core of the efforts to boost rural economy and infrastructure is wise thinking. Ensuring a minimum support price which is 1.5 times the cost will amplify the rural incomes and boost consumption, which in turn will contribute to holistic economic growth. 

Pawan Munjal, Chairman and Managing Director, Hero MotoCorp

If you love road trips, this budget just made it easier to plan ahead. Another 35,000 Km of roads will be constructed under the ‘Bharat Mala’ project of the government, which means you get more roads to drive on.

And somewhere down the road, the Rs 16,000 crore to be spent on rural electrification could mean you will be able to charge your electric car even in remote areas in the future. But wait, there was no real push for electric cars in this budget.

Negative Impact

If you were looking to buy a new car or bike, they probably just got a little more expensive. Customs duties on import of completely built units (CBU) have increased by 5 percent to 25 percent now. So expect the price of imported cars and bikes to increase.

Even if you were picking a brand of car or bike that is being assembled in India (like a Ford Endeavour, Skoda Octavia or a Harley Davidson Street 750), it will still cost you more. Customs duties on completely knocked down (CKD) cars and bikes has gone up by 5 percent to 15 percent now. The price of some components will also go up in almost all cars, as import customs duty has been hiked to 15 percent.

Since every company has to import some kind of components, the increase is going to impact everyone.

Sugato Sen, Deputy Director General, Society of Indian Automobile Manufacturers

If you are a fleet owner or transporter looking to pick up a new set of tyres for your trucks or buses, you will be better off shopping for local brands like MRF, JK Tyre, Apollo or Ceat. Customs duties on truck and bus radial tyres has been hiked by 5 percent to 15 percent. Domestic tyre manufacturers, though, are happy.

I welcome the move to hike duties on imported truck and bus radials. It will help domestic manufacturers. 

Raghupati Singhania, Chairman, JK Tyre and Industries

If you were looking to scrap or sell off your old car or bike and upgrade to an electric vehicle or Bharat Stage VI compliant vehicle, there are no real incentives in the budget in the form of a scrapping policy or discounts for electric cars and bikes.

There has been no extension of direct tax benefits for R&D which was much needed keeping in perspective the upgradation to BS VI emission standards

Gaurav Karnik, Tax Partner – Auto Sector, EY India

There’s no real change in the duties on petrol and diesel, although reports talk of a Rs 2 per litre cut in excise duty. In reality, there has been a Rs 8 levy on road and infrastructure cess, while the earlier road cess of Rs 6 has been removed, leading to no change in duties to you as a consumer.

(With inputs from PTI)