A closer look at budget 2023 and how it could affect the automotive industry and sales here…
Union finance minister Nirmala Seetharaman has delivered a ‘rather interesting’ budget speech, hinting at some noteworthy tips and turns to the Indian automotive industry in the days ahead. Here are all our thoughts compiled on the budget and its possible implications for cars, SUVs, EVs and two-wheelers here. Read ahead to find out who could take the hit and who the candy!
Table of Contents
Car Prices Could Come Down!
Budget 2023 has declared a reduction in customs duties on goods other than agriculture and textiles from the previous 21% to 13%. This could translate to proportionate cuts in cesses and surcharges on vehicle models, in the time ahead. Manufacturers could take advantage of this and slash car prices in 2023. We will have to wait to see the actual expanse of price drops, this’d fetch in reality.
Luxury Cars Could Get Slightly More Expensive, CBU Prices To Shoot Up!
While car prices are expected to go down in general, those of imported high-end luxury/ sports cars will shoot up. The government has raised the import tax slab by 10% ( It is now 70% from the previous 60%!). The usage ‘imported’ could get some of you confused. It is the CBUs that we’re talking about here! Many luxury and sports car makers continue to rely on CBU imports for most of their flagships. While Mercedes Benz, Mercedes AMG, BMW, Audi and Porsche are quite known for their arrays of CBU imports, brands like Skoda also rely on the import route for some car and SUV models. With the new slabs in place, CBU prices are expected to shoot up fairly.
The updated norms state that all CBU vehicle models costing less than $40,000 in freight and with engine capacity of less than 3000cc in petrol or 2500 cc in diesel, will now have the revised slab. Import duties on CBU EVs have also been raised. All electric CBU imports, except those with Cost, Insurance and Freight (CIF) value of more than $40,000, will now have a 70% tax slab. This could be critical in the Indian context. Multiple luxury and sport electric cars and SUVs here are brought in as CBUs and will now get more expensive.
Vehicles, including EVs, brought as Semi Knocked Down units (SKD) will also have their tax slabs go up to 35% from the previous 30%. These could thus, also get slightly more expensive.
EVs Could Get More Affordable
The new budget puts a stronger focus on electric mobility in the country. The revised norms ease things for electric vehicle businesses and brands in India. Customs duty exemptions on capital goods and machinery for Lithium-ion battery manufacturing. This could bring down EV prices in India. EV infra development is also being given enough importance.
Hydrogen Fuel Tech To Be Worked Upon
The government seems to be serious about Hydrogen fuel cell tech and its development. Rs 19,700 crores have been allocated for the development of Hydrogen-based mobility and its infra. Other alternative fuels- Ethanol blend, in particular, would also be worked upon in detail. Apparently underlining the same, the budget has exempted Ethyl Alcohol from basic import taxes.
Support For Vehicle Scrappage
The already existing Vehicle Scrappage policy gets a push from the budget. The finance minister has allotted ample funds for the scrapping and replacement of old government vehicles- Gypsy, Qualis, ambassador and even ambulances. This also underlines its vision for a greener tomorrow.
Buying A Car Would Be Easier!
The budget also raises the rebate for personal income tax to Rs 7 lakh per annum, from the previous 5 lakh limit. This would help salaried consumers to do car-shopping more comfortably, in turn, bringing in more business to manufacturers. More and better financing options could also roll out this year.
More Roads And Infra Coming!
MoRTH would receive Rs 2.7 lakh crores in funding, for the development of roads and infrastructure during the financial year. This, if you might recollect, is a whole 10% increase over what the previous budget had allotted. Expect better roads and faster construction this time.