Looking at Budget 2020 as an enabler

By Sunjay Kapur

We are looking at the Budget 2020 as an enabler with the following measures:

 

1. GST Concessions
   We reiterate the pressing need for uniform GST of 18 per cent on all auto components. In face of the current subdued economic situation, lower GST will definitely ease the pressure on auto component manufacturers and revive the segment. Additionally, the lower GST will arrest the higher cost for BSVI vehicles; naturally spurring consumer sales and smoothen the transition into BSVI.

2. Incentivize EVs
   It is heartening to note that 11 cities have been shortlisted under the FAME initiative for incorporation of EVs into the public transport models. Elimination of existing customs duties of 5 per cent on lithium ion packs, motor controllers etc.; or for example a subsidy on capex for establishing EV plants will boost manufacturing. Concurrently, private ownership of EV should also be promoted through tax incentives and better charging infrastructure.

3. Incentivizing R&D
   In light of the quantum of innovation and disruption the automobile industry is undergoing, not just in India but across international frontiers, it is imperative there is sustained and intensive focus on R&D. On the one hand a corpus fund could give momentum to development of e-mobility components or throw up answers for meeting climate change challenges. Important but relevant in the context of R&D is removal of import duty on prototypes which are crucial for testing; and retention of weighted tax deduction on R&D expenditure. I believe that the retention of weighted tax of at least 150 per cent or ideally 200 per cent on R&D spends will be the boost that the industry is looking for.

4. Vehicle Scrappage Policy
   Logistical efficiencies, emission concerns and consumer transition into new-age technology can all be addressed by a comprehensive vehicle scrappage policy. Eradication of old, polluting vehicles via an incentivized scrappage scheme, maybe reduced road tax and registration charges will benefit all stakeholders in the long term. In addition, it will nudge consumer focus towards BSVI vehicles and EV adoption.

   To conclude, high taxation, a stagnant economy, stressed rural sector has affected consumer behaviour and economic activity in the last year. This Budget must consider the cost factor for both manufacturers and consumers. I believe the above measure, if properly incentivized, implemented and extended to all stakeholders, can turn the fortunes of the industry.

   (Sunjay Kapur is the Chairman of Sona Comstar & Vice-President of ACMA. The views expressed are personal.)

Source: IANS