Budget 2024: Experts are upbeat about initiatives to promote growth, innovation, and sustainability in the automobile industry as the Union Budget for 2024–25 approaches. Analysts speculate that the newly elected NDA administration would concentrate on raising rural spending in order to stimulate demand in the rural areas following a highly competitive election.
Promising Signs for Automobile Sales
Car sales in May performed quite well, particularly for SUVs and commercial vehicles (CVs). Two-wheelers and SUVs have shown remarkable year-to-date (YTD) growth, driven by favourable consumer mood, well-executed price increases, the introduction of new models, and the steady recovery of rural markets.
Electric Vehicle Incentives
Faster Adoption and Manufacturing of Electric Vehicles (FAME), an EV incentive programme offered by the Indian government, has garnered positive feedback. The government has allocated approximately ₹10,000 crore for the third phase of the project, FAME 3, in anticipation of its success. On July 24, the details of FAME 3 are anticipated to be revealed in the Union Budget 2024. This phase is expected to support the expansion of the EV ecosystem, including infrastructure development and local production of vital components like batteries, while continuing to increase demand for EVs through consumer incentives.
Addressing Hybrid Vehicle Taxation
Although hybrid vehicles are less polluting than conventional internal combustion engine (ICE) versions, they do not enjoy the same tax benefits as EVs. A number of automakers that are well-known in the hybrid market have been pushing for lower tax rates on these kinds of cars. It is anticipated that the government will take up this issue in the next Union Budget.
Potential GST Inclusion for Petrol and Diesel
The cost of petrol and diesel has continued to remain around 100 per litre, which has an effect on drivers, the auto sector, and the national economy. A number of groups have advocated for the inclusion of these fuels in the Goods and Services Tax (GST), which would lower their price and benefit consumers and the sector. It is expected that this matter will be addressed in the Union Budget 2024.
Continued Investment in Road Infrastructure
Over the past few years, the road infrastructure sector has experienced huge expenditures that have fueled growth in the logistics and automotive industries. In the Union Budget 2024, the government is anticipated to keep up this pace by promising higher spending to improve road infrastructure even more.
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