Union Budget 2023: Key Takeaways for Auto Industry

Nirmala Sitharaman, Union Finance Minister, presented the Union Budget 2023 today and here are the important automotive industry takeaways.

As is customary, the budget includes provisions for every area of the economy. Here's a look at the big news for the car industry in Modi's second full budget.

1. Customs Duty exempted on Lithium-Ion Batteries

Customs duty on capital goods/machinery for the fabrication of lithium-ion cells for use in batteries of electrically driven cars is eliminated in the Union Budget 2023. (EVs). The measure is expected to significantly down the cost of EVs in the country.

"Customs duty exemption is being extended to imports of capital goods and machinery essential for the fabrication of lithium-ion cells for batteries used in electric cars," Finance Minister Nirmala Sitharaman said in her address.

2. The mission of "Green Hydrogen"

The finance minister emphasized the government's commitment to green transportation by highlighting the recently announced National Green Hydrogen Mission.

The National Green Hydrogen Mission, she claims, would "ease the transition of the economy to low carbon intensity, reduce dependency on fossil fuel imports, and make the country take technical and market leadership in this new industry" with a budget of Rs 19,700 crores.

"Our goal is to attain 5 MMT yearly output by 2030," she continued.

3. Basic Custom Duty Changed

The finance minister recommended in the Union Budget 2023 to cut the number of basic customs tax rates on items other than textiles and agricultural from 21% to 13%. As a result, several fundamental customs fees, cesses, and surcharges, including those on autos, have undergone modest adjustments.

4. Scrapping Old Vehicles

In addition to the car scrapping strategy indicated in Budget 2021-22, the minister stated that she will grant cash for the Central Government to destroy obsolete automobiles. States would also be aided in the replacement of obsolete cars and ambulances, she noted.

5. Tax Rebates leading to more disposable income

The Union Budget 2023 raises the personal income tax refund ceiling from 5 lakh to 7 lakh. This is anticipated to provide more discretionary cash for salaried folks to spend on items such as autos.

"Currently, persons with incomes up to 5 lakh do not pay any income tax under either the old or new tax systems. In the new tax regime, I suggest raising the refund maximum to Rs 7 lakh. Thus, under the new tax regime, anybody earning up to Rs 7 lakh would not have to pay any tax," the minister explained.