Automotive industry unhappy with Budget 2013 | SupportBiz

Policy Notes

Automotive industry unhappy with Budget 2013

SupportBiz attempts to find out the reactions of stakeholders from the automotive industry to the Union Budget 2013-14.

Gaurav Aggarwal, founder and CEO,  Savaari Car Rentals, says, “The standard rate of excise duty and service tax was kept unchanged. Also, no change was made in the peak basic custom duty rate on non-agriculture goods - automotives in particular.”

He also highlights  some  negative elements in the budget for his industry. Aggarwal says, “Companies like Savaari have little to rejoice for after this budget.  We were expecting that   the service tax will be reduced, as  it makes travel costly. The service tax, coupled with higher fuel prices, will push down overall demand for leisure travel.”

Aggarwal adds, “The increase in import duty on high-end motor vehicles from 75%  to 100%  is also going to negatively impact  car rentals and the tourism industry. Foreign tourists want cars with safety and comfort similar to  the ones they use in their own countries. Even though the number of such cars is very low, fleet owners would have to pay more for such cars now. High inflation, coupled with no changes in personal taxes, will dampen  leisure and holiday travel during holidays.”

However, the positive side of the Union Budget is  the higher plan allocation for road infrastructure. Commenting on this move,  Aggarwal says,“Allocation of funds for  road infrastructure will certainly give a boost to the tourism industry.”

Lavleen Raheja, CEO and Chairman,  Franklin Covey,  says, “Focusing on and investing strongly in  skill-building initiatives for the youth of our country was one definite highlight in the 2013 budget.  I would recommend that the NSDC and the government  ensure  skill building, in terms of  both domain skills and behavioural skills.  Doing only one shall not be complete.  Equal emphasis on both is required on a sustained basis.”

Raheja also  says, “SME growth will   lead to stable growth  of our nation. Hence, our SMEs also require skilled people to take them forward effectively. This announcement in the Union Budget will help the sector in a big way.”

Stating that the Finance Minister has taken a balanced approach  in the Union Budget 2013-14 with the objective of achieving sustainable economic growth, Vimal Kedia, Managing Director, Manjushree Technopack, says, “The MSME sector has every reason to rejoice. Doubling the refinancing capacity of SIDBI to Rs. 10,000 crore is a positive sign for potential growth. Also, MSMEs will continue to obtain non-tax benefits for another  three years. Easier listing norms will help participants from the sector  to raise money without the hassles of an IPO. However, the inaction on the Goods and Services Tax (GST) front is a big dampener. More could have been done to give a boost to the SME sector, given the prevailing conditions.”

“The manufacturing industry will be the biggest beneficiary, with 15% investment allowance over a Rs. 100 crore investment. The reduction  in SST is welcome. However, the introduction of CTT on non-agri commodities might add on to the cost of managing risks through hedging.” Kedia states.

“Considering the current global economic situation, the government’s target for fiscal deficit, pegged at 5.2 % for the current year and 4.8% for the next fiscal, seems a bit too optimistic. However, overall, I will rate the budget between neutral to positive,” adds Kedia.