Budget 2023: Key highlights for the Indian auto industry
Union Finance Minister Nirmala Sitharaman announced a series of measures for the auto industry during her Budget 2023 speech she presented on Wednesday to Parliament. The Minister announced a series of measures, including proposals for indirect taxes, elimination of customs duties on imported EV battery manufacturing goods, a focus on hydrogen fuel, etc.
One of the most important announcements is the elimination of customs duties on imported capital goods for the production of lithium-ion batteries, which will ultimately help reduce the cost of electric vehicles in the country. However, this will apply to electric vehicles that will be produced locally in India. Sitharaman said in her budget speech that the indirect tax proposals would boost green mobility and the electric vehicle sector in the country. “Customs exemptions are extended to import capital goods and machinery needed to manufacture lithium-ion batteries for batteries used in electric vehicles,” she said. She also proposed to continue applying preferential tax rates on lithium-ion batteries for another year.
Also read: Budget 2023: Nirmala Sitharaman pays attention to getting rid of old vehicles
While reiterating the government’s focus on green mobility, Sitharaman announced that there will be $19,700 crore is allocated to the National Hydrogen Mission, which aims to reach a production capacity of 5 million tonnes by 2030. The strategy will help promote hydrogen-fueled mobility in India, which the parties are interested in. related in the automotive industry has advocated recently.
Auto sales in India could also increase thanks to the proposed reduction of the basic customs duty rate for goods other than agriculture and textiles from 21% to 13%. As a result, there will be small changes to customs duties, deductions and surcharges for cars, the finance minister said. In addition, the personal income tax reduction limit has been increased from $5 lakh per year to $7 lakh per year in the 2023 Union Budget. This step is likely to help the Indian auto industry to record more sales as higher disposable income with salaried consumers can boost more demand for personal vehicles.
While announcing the budget, the Minister of Finance has specially emphasized the Scrap Vehicle Policy. She announced that the central government would allocate more money to get rid of old vehicles. She also said that the center will assist state governments in getting rid of old vehicles as well as ambulances. “In addition to the Vehicle Scrap Policy announced in Budget 2021-22, more funds have now been allocated to support the central government’s legacy vehicle removal efforts. States will also be supported to help them get rid of old vehicles and old ambulances,” Sitharaman said in her budget speech.
First published date: February 1, 2023, 12:51 PM IST