Finance Minister Arun Jaitley has presented the Union Budget in the Indian parliament and has made some major announcements that will benefit the auto industry if not immediately, then over the course of this financial year.
The first and most major one of course is that GST (Goods and Services Tax) will be implemented by April 2016 bringing about uniformity in pricing of vehicles across the nation. This indirect tax system when implemented will integrate a large number of central and state taxes into a single system thereby eliminating the double tax system. In the larger scheme of things it brings about evenness in the cost of ownership in vehicles across the country.
However, for the smooth and gainful implementation of the GST, the Centre has increased service tax from 12.36 per cent to 14 per cent. It is expected that this move will come in place with immediate effect and carry on till April 1, 2016, the implementation date.
During the presentation of the budget, the finance minister also announced that Rs 70,000 crore would be allocated for spending on infrastructure projects and that tax-free bonds would be issued for funding of these infrastructure projects. We believe that all the proposals announced by Transport Minister Nitin Gadkari over the course of 2014 will now get the green light or be completed over the course of this year. On a related note the outlay for roads has increased to Rs 1,461 crore.
The other major announcement from the minister was that Rs 75 crore was being allocated for the supporting the manufacturing of electric vehicles. While this is a really (really) small amount compared to the actual required investment to get the industry going in full strength, it is a start to something much bigger. We believe that with the ‘Make in India’ campaign now gaining some major strength, this amount will surely grow at least three to four folds by 2020- the proposed year of National Electric Mobility Plan.
The minister also briefly announced that there would be a revision to the customs duty rates but did not elaborate too deeply into the matter and said that it would be explained in detail at a later date. There has been no specific announcement with regard to the roll back of the excise duty hike or the reduction of interest rates.
We will bring you reactions from various quarters of the two-wheeler industry by this evening, stay tuned BikeWale.
