Finance Minister Nirmala Sitharaman recently presented the Union Budget for FY 2024-25, marking the first full budget of the third term of the Modi and NDA government. The union minister hasn’t mentioned any specific provisions for the automotive industry, which many in the sector had been hoping for. However, there are some indirect benefits and provisions for the industry. Below are some key highlights: –
- ₹3500 crore for the PLI incentive scheme for automobiles and auto components: This will boost the production of vehicles and parts in India, creating more jobs and improving the industry’s growth.
- ₹250 crore for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage: This funding will support the development of advanced battery technology, enhancing the efficiency and availability of electric vehicles.
- Exemption of Customs Duty on Lithium, Cobalt, and other rare minerals: This will make it cheaper to import these essential materials, lowering costs for manufacturing batteries and other components.
- Extension of concessional Customs Duty on Li-Ion Cells until March 2026: This will continue to reduce costs for producing and importing lithium-ion batteries, promoting the use of electric vehicles.
- Withdrawal of the 2% Equalization Levy on e-transactions: This will reduce the cost of online transactions, benefiting e-commerce and digital services.
- While the government hasn’t announced the FAME-III scheme, it has allocated ₹2671.33 crore for FAME in FY25, down from ₹5171.97 crore in FY24. This may still support EV adoption and infrastructure, but the reduced funding could slow down progress.
Industry’s Reaction on Budget 2024
Speaking on the budget announcements, Mr Vinod Aggarwal, President, SIAM and MD & CEO, VECV, on Union Budget 2024-25 said, “The Indian Automobile Industry welcomes the continued emphasis on economic growth with several announcements especially the strong fiscal support for infrastructure in the next 5 years. The announcements such as liberal allocation for rural development & infrastructure of Rs 2.66 Lakh crores is a welcome step that will boost the rural economy”.
Mr. Rajeev Chaba, CEO Emeritus, JSW MG Motor India Pvt. Ltd. said, “During Union Budget 2024, the Honourable Finance Minister’s decision to waive import duties on critical minerals, including lithium, copper, and cobalt, is a step in the right direction for the electric vehicle [EV] industry. This move will reduce battery manufacturing costs, making EVs more affordable and attractive. It will also enhance lithium-ion battery production in India, supporting localisation efforts and advancing the sector’s growth. Additionally, the government’s initiatives for job creation and investment in industrial training centres will ensure a skilled workforce in the automotive sector. While the budget lays a strong foundation for overall economic growth, we look forward to ongoing government’s support and incentives to accelerate green mobility and promote sustainable practices.”
Mr. Vikram Gulati – Country Head and Executive Vice President, Corporate Affairs and Governance, Toyota Kirloskar Motor, said,
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“The budget is finely balanced with the government continuing to focus on infrastructure development as well as heightened outlays towards social sector, while maintaining the glide path towards fiscal consolidation by keeping the fiscal deficit at 4.9%. The thrust on welfare of farmers through enhanced productivity in the agricultural sector as well as the measures to improve women participation in workforce will help to broaden the benefits of economic growth. Furthermore, the government has given special attention to MSME and manufacturing sector with key measures and specially formulated packages. This will help to enhance the contribution of manufacturing to national GDP. It is encouraging to note the various measures proposed by the government towards energy transition and for mitigating climate change. The fight against carbon emissions and the goal of achieving carbon neutrality by 2050 is at the core of Toyota Kirloskar Motor (TKM) sustainability efforts.We welcome the increased emphasis towards education and skilling with the introduction of several transformative measures for students and youths. Complementing this, the introduction of internship scheme with stipend from CSR (corporate social responsibility) spending is encouraging, aimed at providing good exposure to real work environment and heighten job opportunities. These measures are bound to help the country realize the advantages of demographic dividends. At TKM, youth upskilling is one of the core areas where we have been contributing aligning with ‘Skill India’ initiative, through various skill programs making them industry ready. The tax rationalization will make available more disposal incomes, thereby boosting consumption which will help spur economic growth. We welcome and look forward to the various reforms that the government intends to bring within the given timeframe. Reiterating our pursuit of ‘Grow in India, Grow with India’, we at TKM are aligned with the nation’s priorities, committed with our strong efforts towards the set path of ‘Viksit Bharat’.”
“With its focus on farmers, this forward-thinking budget is set to enhance the livelihoods by promoting sustainable practices, boosting productivity, and developing digital and financial infrastructure. By introducing 10 million farmers to natural farming techniques and emphasizing on agricultural research will help develop climate resilience for a more secure future. Furthermore, the three-year plan and framework for digital infrastructure will benefit farmers with access to vital information, such as weather forecasts, crop advisory services, and market prices. This will enable informed decision-making, better crop management, and increased financial resources for investing in advanced farm equipment and precision technology, driving growth, productivity, and crop quality”, said Mr. Narinder Mittal, Country Manager & Managing Director – CNH India & SAARC.
Srini Chinamilli, Co-founder and CEO of Tessolve said, “This year’s budget is forward-looking and aimed at making India self-reliant while equipping our youth with the skills necessary for employment. The government has announced various plans to tailor courses in collaboration with industry, fostering strong industry-academia partnerships to enhance skill development. Its plan for freshers and internships will also help the new and potential employees. Tessolve is proud to have contributed to upskilling individuals over the past few years. With the government support, this effort will further boost emerging sectors like semiconductors, addressing the skill gap effectively. Additionally, investments in research, including funding for the Anusandhan National Research Foundation, will significantly boost advancements in cutting-edge technologies. Through these steady and strategic investments, we are paving the way for India to emerge as a global superpower”.
