As the PM Modi-led National Democratic Alliance (NDA) government returns to office for a third term, the Indian automobile sector is buzzing with excitement as they anticipate a potential boost under Modi 3.0. Expectations are high for regulations and initiatives that might help the industry reach the estimated USD 300 billion milestone by 2026 as it prepares for exponential expansion.
Policy Boost
The groundwork for expansion has already been laid by recent government programmes including the Bharat New Car Assessment Programme (BNCAP), Faster Adoption and Manufacturing of Electric Vehicles (FAME), and Production Linked Incentive (PLI). However, those involved in the automotive sector hope to see more policy changes, especially in areas like introducing calibrated import duty structures, offering incentives and tax benefits for research and development (R&D), and rationalising GST structures for auto components.
Incentives for Investment
An important incentive for more investment and job creation in the industrial sector would be to extend the deadline for exemption under Section 115BAB for new enterprises until March 31st, 2026.
Strengthening Supply Chains
Although the government’s emphasis on improving supply chain infrastructure and logistics is praiseworthy, the sector anticipates that this momentum will continue, with efforts focused on making supply networks more flexible and robust to shifting conditions.
Commercial Vehicle Dynamics
It is critical to acknowledge the crucial role that government-led infrastructure expenditure plays in supporting the commercial vehicle ecosystem. It is imperative that policies and budgetary efforts be in line with the objectives of infrastructure development to guarantee the continued expansion of commercial vehicle manufacturers, OEMs, and financiers.
Luxury Car Segment
The luxury automobile market, which contributes significantly to the GDP, is looking for a more streamlined GST and levy system. The category, which is now subject to the highest GST slab of 28% plus extra cesses, is in favour of a more equal tax structure in order to promote growth.
Consistency and Stability
The automobile sector mainly seeks consistency and stability in policy, free from unanticipated changes that can harm long-term investment and planning.
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