Budget and Auto Sector

2 Feb 2023 , 11:25 AM

• Scrappage of old govt vehicles and ambulances, and replacement with new ones positive for PV industry.
• Customs duty exemption on import of capital goods and machinery required for manufacture of lithium-ion cells (EV batteries).
• FAME budget increased from Rs29bn in FY23 to Rs52bn in FY24.

• To support 4,090 buses, 15,000 cars, 100,000 3Ws, 320,000 2Ws in FY24.
• While the increase in FAME allocation is positive, number of vehicles targeted to be supported (especially PV, 2W) is very small in the context of industry size.
• Budget includes allocation for setting up charging stations.

• Slight increase in duty on import of vehicles (CBU up from 60% to 70%; SKD up from 30% to 35%).

Analysts of IIFL Capital Services believe positive impact of the budget announcements on the auto sector.