Impact of Union Budget 2024 on the Automotive Industry

Import duties on 25 critical minerals, including lithium, have been waived by Finance Minister Nirmala Sitharaman. This move is expected to lower the manufacturing costs of batteries and consequently reduce the prices of electric vehicles for consumers.

The Indian automobile industry largely reacted positively to the announcements made as part of the Union Budget 2024 in Parliament by Finance Minister Nirmala Sitharaman. During the Budget 2024-25 presentation, Sitharaman emphasised the central government's key priority areas, including employment and skilling, manufacturing and services, infrastructure development, and inclusive human resource development.

Despite proposing nearly halving the allocation for FAME II from FY24 Budget estimate of ₹ 5,172 crore to ₹2,671 crore for FY 25, the overall Budget 2024-25 received positive feedback from the automotive sector.

 

Union Budget 2024 Auto Industry Live Updates

₹ 26,000 Crore Boost to Road Connectivity Projects: Finance Minister Nirmala Sitharaman announced a significant allocation to enhance road connectivity projects.

Incentives for Job Creation in the Manufacturing Sector

The government is incentivizing job creation in the manufacturing sector, which is expected to impact 30 lakh youth. Rajat Mahajan, Partner at Deloitte India, suggests that these additional skilled workers with disposable incomes will drive growth in the automotive industry, particularly in the 2-wheeler segment.

Industry Reactions to Union Budget 2024-25

Vinod Aggarwal, President, Society of Indian Automobile Manufacturers (SIAM), and MD & CEO, VECV: 

"The Indian Automobile Industry welcomes the continued emphasis on economic growth with several announcements, especially the strong fiscal support for infrastructure in the next five years. The liberal allocation for rural development and infrastructure of ₹ 2.66 lakh crores is a welcome step that will boost the rural economy."

Manish Raj Singhania, President, Federation of Automobile Dealers Associations:

"The recent budget announcement by the Government of India brings a blend of optimism and challenges for the auto retail sector. The focus on 'Garib', 'Mahilayen', 'Yuval, and 'Annadata' highlights a comprehensive approach towards inclusive growth, which is commendable. The enhanced Minimum Support Prices for major crops and the launch of Phase IV of PMGSY are positive steps that will boost rural incomes and improve rural connectivity, thereby potentially increasing rural auto sales. 

Adjustments in personal income tax, including increased standard deductions and relief for salaried employees and pensioners, are welcome measures that will enhance disposable incomes, fostering a more favourable environment for auto sales."

Pawan Munjal, Executive Chairman, Hero MotoCorp:

"The Budget 2024 is a visionary and pragmatic blueprint designed to propel our economy forward and foster a sustainable future. I am confident that this budget presented by Hon'ble FM Nirmala Sitharaman will stimulate consumption, attract substantial investments, and stabilize inflation. This budget successfully addresses the dual imperatives of economic growth and fiscal responsibility."

Nirmal K Minda, Chairman and Managing Director, Uno Minda:

"We welcome the Union Budget 2024-25 with its forward-looking initiatives to boost job creation with a focus on urban infrastructure and strengthening the manufacturing sector. The scheme linking job creation to the employment of first-time workers is a significant step towards fostering growth and inclusion. The incentives for EPFO contributions, benefiting both employees and employers for the first four years, will provide a substantial boost to our efforts in nurturing young talent."

ACMA (Automotive Component Manufacturers Association):

"ACMA is delighted by the measures announced towards employment, skilling, internships, and research. Reduction in customs duty to nil on critical minerals such as lithium, copper, cobalt, nickel, etc., will encourage cell manufacturing in the country and add to the evolving EV ecosystem in the country."