Budget 2024: Automakers seek continued push to green mobility, infra development

The Indian government is all set to present the interim budget on 1st February 2024. The auto industry of the country is betting big to get some favourable policies to be mentioned in the budget announcement, like the promotion of green and clean mobility while also focusing on infrastructure development at a robust pace, reveals a PTI report.

Mercedes-Benz India MD and CEO Santosh Iyer has reportedly said the German luxury car manufacturer expects capital expenditure on infrastructure projects to continue, which will help the automotive sector. He also reportedly said that the policy push for green mobility should remain a key focus for the government. Iyer further noted that the government should continue focusing on faster adoption of electric vehicles.

Rationalised tax on luxury cars

The luxury car segment in the Indian passenger vehicle market has been growing rapidly over the last couple of years. Mercedes-Benz has been spearheading the segment. Noting that, Iyer added that the luxury car industry in India has been significantly adding value to the GDP and the segment aspires for a rationalised tax structure and GST on priority. "Overall, we expect consistency in various policies and no surprises in the upcoming budget," Iyer further added.

Mercedes-Benz India official's comment comes at a time when luxury vehicles are slapped with 28 per cent tax under the GST regime, with an additional cess of 20 per cent on sedans and 22 per cent on SUVs, taking the total tax incidence to up to 50 per cent.

Continued focus on green mobility

The Indian government has been increasingly pushing hard for greener and cleaner mobility. While electric mobility has been growing fast across different segments in the Indian automobile market, other cleaner powertrain solutions such as hybrid and fuel cell technologies too have been drawing focus, but not at the same level.

Toyota Kirloskar Motor Deputy Managing Director (Corporate Planning, Finance & Administration and Manufacturing) Swapnesh R Maru reportedly said that the automaker remains confident about the Indian government's continuous push towards shifting the country's economy and transportation sector to a greener future that is less dependent on fossil fuels such as petrol and diesel. "Looking ahead, policy stability and continued emphasis on spurring investment and infrastructure development will not only further enhance the country's global competitiveness but also lead to the growth of the manufacturing and service sector," he reportedly added.

FAME scheme extension

The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India, popularly known as the FAME scheme has been highly instrumental in pushing the growth of electric vehicles in the country. After witnessing the success of FAME 1, the government introduced the second phase of the scheme with some additions and amendments. FAME 1 lasted from 2015 to 2019 and the FAME 2 was introduced in 2019.

After the second phase was completed in 2022, the government further extended it a couple of times and now, it is scheduled to end on 31st March 2024. The government decided against extending it further, primarily because of accusations of widespread malpractice and noncompliance with the program's guidelines. However, the auto industry hopes the government will continue to support the electric vehicle ecosystem by extending it or introducing the FAME 3 scheme.

Kinetic Green founder and CEO Sulajja Firodia Motwani reportedly expressed optimism that the Indian government will continue to support electric vehicles with the announcement of the FAME 3 scheme.