BUDGET EXPECTATIONS: AUTOMOTIVE

16 Jan 2023 , 01:45 PM

ICRA expects the Government to continue with its thrust on green mobility, infrastructure projects and job creation in the upcoming Budget, which would consequently support the automotive sector. The domestic automotive industry has seen a healthy revival in the current fiscal, aided by a recovery in economic activities and increased mobility. The demand sentiments for majority of the automotive segments viz., passenger vehicles, commercial vehicles and tractors, have remained healthy, aiding in improved offtake for the industry participants. However, the two-wheeler industry continues to struggle as the industry volumes are still below the pre-covid peak levels, even as improved offtake in the recent festive and marriage season has provided optimism.

It expects Union Budget 2023-24 to include adequate budgetary outlays towards rural employment under MGNREGA, rural infrastructure development, enhancement of irrigation facilities as well as increase in targets for agricultural credit. The focus will be on making consumers feel better, and measures to help rural communities are expected to be at the heart of its policies.

Amid the ongoing electrification transition, ICRA foresees the OEMs are expected to incur significant investments to develop ground-up electric vehicle platforms and enhance manufacturing capacities. In the last few years, the Government has come out with a number of schemes, such as FAME II and production-linked incentive schemes, to boost the local manufacturing ecosystem. It is likely to make more announcements in this area, such as better financing terms for electric vehicles, as it continues to work toward its Make in India goals.