Nirmala Sitharaman became the first full-time female Finance Minister of India to present a union budget today (5th July, 2019). With the Modi-led BJP government all set to embark on its second stint at the helm, the finance minister was surely under pressure to deliver a budget that balances economic growth as well as citizen happiness. And as far as the automotive industry is concerned, the Union Budget 2019 has been a mixed bag.
Following are a few key automotive industry-related pointers that were announced during the Budget speech today:
- Higher cess on fuel (petrol and diesel)
The government has introduced a new special additional duty and road & infrastructure development cess on diesel and petrol. This additional duty will immediately increase the price by Rs. 2.5 per litre for petrol and Rs. 2.3 per litre for diesel. This is a major setback to the automotive industry has running costs of vehicles has directly been increased.
- Lower GST rate on electric vehicles
The GST (goods and services tax) rate on electric vehicles (EVs) has been reduced from 12% to 5%. This is being considered as a major relief from high price tags of the EV industry. The lower GST rate, along with the higher fuel prices, will also serve as a deterrent to automakers and will motivate them to invest on electric vehicles for the future. The central government has already waived off registration fees on electric vehicles in India.
- Income tax benefits for electric vehicle buyers
In order to provide motivation to customers to switch to electric vehicles, the government has announced tax benefits of up to Rs. 1.5 lakh on the purchase of EVs. Electric vehicles buyers will thus be eligible to claims an income tax deduction of Rs 1.5 lakh on the interest paid on loans taken for the purchase.
- Reduction in customs duty for electric vehicle parts
It is a known fact that a large number of parts for electric vehicles are imported in India. The government has thus reduced customs duty on import of electric vehicle parts in India. This is expected to give a boost to Make in India, motivating manufacturers to manufacture EVs in India by importing parts from other countries.
Also Read: Upcoming electric cars in India
While the conventional automotive industry will surely be disappointed by the increase in fuel prices, the multiple motivators for EVs can surely be considered to be the first big steps towards the government’s dream of having just electric cars on sale in India by 2030.