Budget 2024: Auto industry wishes for FAME 3, tax sops for hybrids & more

The Indian automobile industry is at a crossroads. Multiple disrupting factors have been playing a crucial role in the industry over the last few years. Being an apex manufacturing industry, the Union Budget always draws a lot of attention from the auto sector. Earlier this year, when Finance Minister Nirmala Sitharaman presented the interim budget, there was nothing to boast about for the auto industry. However, with the complete Union Budget 2024 slated to be tabled on July 23, the Indian auto industry has a lot of expectations from the government.

1 Tax sops for hybrid cars

In the recent past, the most discussed topic in the Indian auto industry is the tax sops for hybrid vehicles. Over the last couple of months, some automakers in India like Toyota have been advocating for tax benefits for hybrid vehicles stating that this technology allows a car to emit fewer pollutants into the environment compared to pure petrol or diesel vehicles. On the other hand, some other automakers like Tata Motors have been lobbying against it saying that despite having electrification, hybrid technology emits pollutants and is in no way comparable with electric propulsion systems. Uttar Pradesh government announced a registration fee waiver for strong hybrid and plug-in hybrid vehicles a few days ago, which has further made the case stronger for OEMs demanding tax sops for hybrid vehicles.

2 FAME 3

A major announcement expected from the Union Budget 2024 is FAME 3. After the successful implementation of the first and second phases of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, the auto industry has been seeking a third phase of the program, which would further bolster the growth of electric mobility in India. With the Indian government aiming for 30 per cent penetration of electric mobility in total auto sales of the country by the end of this decade, FAME 3 is expected to play a crucial role. The auto industry expects the government to allocate a higher budget under the FAME 3, which will focus on the comprehensive growth of the EV ecosystem in the country.

3 Incentive boost for scrappage policy

The auto industry seeks an incentive boost for the vehicle scrappage policy. While the Indian government has already introduced the vehicle scrappage policy, the industry hopes the Budget 2024 will introduce an incentive for the vehicle owners who would opt for the vehicle scrappage policy. This would further bolster the strategy of retiring old, polluting vehicles and replacing them with a new vehicle fleet.

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