Hit hard by demonetisation, auto industry hopes for incentive schemes, moderate taxes in Budget 2017

The auto industry witnessed biggest drop in 16 years in December as the sales fell by 18.66% in the month to 1.2 million units.

This major fall is attributed to demonetisation, which shook the industry. Now, the auto industry has high hopes from Budget 2017 that it will bring some reprieve for the automakers.

"Budget is something which we all are hoping that the government will bring measures to boost consumer sentiment," Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said.

READ ALSO: India’s auto sector witnesses biggest drop in 16 years, thanks to demonetisation

The auto industry hopes Finance Minister Arun Jaitley to announce a slew of initiatives such as concrete policy on fleet modernisation, specially of commercial vehicles and passenger vehicles.

"We have also pointed out that the incentive scheme for electric mobility under the FAME scheme must be extended as most of the automobile companies have been working towards this direction," Mathur said.

In order to promote eco-friendly vehicles, the government had formally launched the FAME India scheme in 2015 offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars. It envisaged Rs 795 crore support for the first two fiscals.
Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India (FAME India) is part of the National Electric Mobility Mission Plan.

On the taxation side, Mathur said it is unlikely that the GST will be implemented from April 1.

"However, we have been seeking moderation of taxation for the automobile industry and reduction of slabs from the current four, ranging from 12-30 per cent, to two slabs," he said.

SIAM had proposed a base rate for small cars and two- wheelers and another 8 per cent addition to that for larger cars, he added.