Thursday, January 13, 2022
By Manoj Kumawat
What Indian Auto Industry Can Expect From Union Budget 2022?
The year 2018-19 was the last time when the Indian Auto Industry performed well according to expectation, after which it started declining. At that time the experts started blaming the implementation of BS-VI emission norms responsible for the decline and expected the situation to improve in April 2020. But unfortunately, with the arrival of the global pandemic COVID-19 in India during March 2020 and the nationwide lockdown, the situation started deteriorating.
In the third quarter of 2021 when things started improving for the auto industry, the second wave of COVID-19 hit the nation. The impacts of the second wave were more serious than the first wave. After lockdown when life started turning to normalcy the PLI incentives announced by the Government of India developed some hopes of recovery for the auto industry. However, at the beginning of 2022, these hopes also seem to diminish due to the rumours about the third wave of COVID-19.
It is important to note that the auto industry contributes half of the industrial GDP. At present due to COVID-19, it is going under extremely severe conditions. With this, the dynamic hike in the prices of commodities and the services like travel, entertainment, shipping, increase in the prices of raw materials used for auto manufacturing has also affected the demand for vehicles in the country. Along with all these ongoing conditions, the decline in the supply of semiconductor chips has compelled auto manufacturers to minimize their production activities. On the other side, the encouragement to the producers of electric vehicles by the government has also affected the choice of buyers - that which vehicle they should buy for their travel. This confusion in the minds of buyers has also affected the performance of the auto industry.
Under all these uncertain circumstances, the auto industry expects some type of certainty in tax and regulatory policy. Although during the last couple of years there have been regular efforts by the government to simplify and rationalize the tax laws in India, there are still some areas that create the situation of uncertainty among the Indian automakers. Keeping all these facts in concern there are chances that the Government of India will simplify and rationalize the tax policies.