Union Budget 2024 to be tabled on July 24. Key expectations for Indian auto inc.

As the new session of the Parliament has commenced, India is preparing for some significant announcements which are expected in the upcoming Union Budget for the current fiscal year. While Finance Minister Nirmala Sitharaman presented an interim budget earlier this year, there was nothing much for the auto industry there. However, with the full-fledged Union Budget 2024 approaching, the auto industry is seeking some steps that could propel the growth of the sector in the country. Also, the Indian auto industry has been seeking some measures to be taken by the government, which could provide a much-needed breather.

1 FAME 3

The Indian government’s flagship electric vehicle incentive programme, Faster Adoption and Manufacturing of Electric Vehicles (FAME) has received a pretty good response, which propelled the government to introduce the second phase of the scheme. Now, FAME is gearing up for its third edition with a significant outlay of approximately ₹10,000 crore. Expect the FAME 3 and its details to be announced during the Union Budget 2024 on July 24, which will outline the government's plan to promote electric mobility in the country over the next few years. Expect the proposed FAME 3 scheme to follow in the footsteps of FAME 2, which ended in March 2024. It would focus not only on boosting demand by providing incentives to consumers but on a holistic approach to promote electric mobility by encouraging growth of the EV ecosystem through infrastructure development, local manufacturing of key components like batteries etc.

2 Tax sops for hybrid vehicles

While electric vehicles enjoy the benefit of tax sops and incentives in India through various schemes, the hybrid vehicles don' get that liberty despite being lower emission vehicles compared to pure ICE models. Several automakers that have strong presence in the hybrid vehicle segment have been advocating tax rate reduction for these electrified vehicles over the last several months. Expect the government to address this concern during the Union Budget 2024.

3 GST for petrol, diesel

Over the last couple of years, petrol and diesel costs have remained at the periphery of around ₹100 a litre, which is an all time high in the country. This has made a long-term impact on motorists, vehicle industry and overall economy at large. There has been demands from various stakeholders that the petrol and diesel be brought under the ambit of GST, which may reduce cost of the motor fuels, bringing a much-required breather for the common people and industry as well. Expect the government to address this issue during Union Budget 2024.

4 Increased infra spending

One of the key sectors that have been witnessing massive investments over the last couple of years is the road infrastructure. Rapidly improving road infrastructure has been fuelling the growth in automobile industry and logistics sector. In Union Budget 2024 as well, the government is likely to continue the momentum and announce an increased investment amount.

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