Reactions From Automobile Companies On The 2016 Budget

While Finance Minister Arun Jaitley revealed the NDA government's Financial Budget 2016 to strengthen the fastest growing economy in the world at the moment, the reactions from the automobile companies operating in India were pretty interesting despite expensive and luxury cars feeling the heat of additional tax. Here's what they have to say about the 2016 Budget :

Nigel Harris, Managing Director and President, Ford India
"We complement the Government for its vision of a strong economy built through sustained investment in rural growth and infrastructure development. The budget, however, lacks a roadmap for the automotive sector, which has for long continued to be an engine of India's economic growth. The high level of discounting in the domestic market today indicates weak consumer demand. Instead of introducing policies, such as excise duty rationalization, or vehicle modernization, the budget has levied additional taxes that will be further detrimental to sales and growth prospects for the industry.”

Mr. Guillaume Sicard, President – Nissan India Operations

The Union Budget 2016 has continued with the government’s focus on maintaining fiscal deficit, agriculture, infrastructure development and recapitalizing of PSU banks. The budget gives special focus on the economy at the grass-root level which will have an overall positive impact in the long run. Additionally, we also welcome Government’s decision to amend the Motor Vehicle Act in passenger vehicle segment to allow innovation. This, coupled with a focus on infrastructure will help improve the overall public transport in the country.

There is not much for Auto industry in this budget. Infrastructure cess increase up to 4% on passenger vehicles will definitely have an impact on the prices. We do not foresee that to be a major burden for small car buyers but the luxury cars and SUVs will feel the heat. We are still trying to understand the modalities of collection of TDS of 1% on more than 10 lakh priced cars. Further, curbing incentives on in-house R&D spends from 200% to 150% is not very positive. There is no presentation on roadmap for GST implementation, additional Incentives for Electric Vehicles and Hybrids under FAME Scheme and the plan for Vehicle Scrappage scheme which is damper.”


Mr.‎ Vimal Sumbly, Managing Director - Triumph Motorcycles (India) Private Limited
“Budget 2016 has generated positive sentiment among the masses of India. We have seen significant changes in the personal finance structure, a more robust medical program, greater thrust on agriculture and rural development, public investment sector and better governance practices. The government has also announced schemes for improving financial and education sectors. The government has allocated a whopping 97,000 crore towards road infrastructure with nearly 85% of held up projects coming back on track. This will definitely aid the automotive and transport sector and help people get better road infrastructure. Overall, the common man is greatly supported through multiple initiatives introduced in this budget.

However, the concerns of the auto industry such as lower import duty and implementation of GST have been left unaddressed. Additional taxation on luxury vehicles is likely to have an adverse impact on the premium automobile sector which contributes so heavily to the manufacturing sector and economy at large. We hope to see more discussions over the same in future.”

Mr. Shekar Viswanathan, Vice Chairman and Whole - Time Director, Toyota Kirloskar Motor Pvt. Ltd

"We would have expected some measures to promote alternate fuel technologies which would have helped the environment also. We would encourage the government not to just think based on size of the vehicle which has no relation to the technology. Taking older vehicles off the road should be a priority for the government. We compliment the measures and schemes which have been introduced to benefit the masses and also thrust on infrastructure which would have a long term impact on the growth of the nation."

Mr. Yadvinder Singh Guleria, Senior Vice President - Sales & Marketing, Honda Motorcycle & Scooter India Pvt. Ltd.

"We welcome the Union Budget. The Honorable Finance Minister has walked a fine rope of balancing social welfare with economic growth. In the backdrop of 2 consecutive weak monsoons, the Government’s focus on rural sector especially farmer welfare, education, interest subvention on existing loans and skill development will inject strength in rural economy. The INR 1 lac crore allocation on road and highways will accelerate connectivity and mobility across all geographies led by rural areas, which is very positive news for overall auto industry. Overall, we expect such measures once implemented, will revive the stagnant demand of 2Wheelers in the rural market."

Dr. Pawan Goenka, Executive Director, Mahindra & Mahindra Ltd

“The Budget places strong emphasis on agriculture, rural economy, infrastructure and social sector. This is what I was hoping for. The resurgence and thrust on the PPP in infrastructure is most welcome. I also appreciate laying down some very clear goal posts on farm income and on village electrification.  Perhaps more could have been done for financial sector and taxation, though staying with the FRBM target was an unexpected bold move and perhaps does put some spending constraints on the Government.

On the face of it, imposing upto 4% Cess for Passenger vehicles is a concern for auto industry. However, one has to take it in stride, in view of all the priorities that we have for our economy and we in the industry have to manage it. Would have been good if some of the additional revenue from this cess was used to phase out older vehicles.”

Mr. Baba Kalyani, Chairman, Bharat Forge Ltd

“A good budget on expected lines which has managed to keep fiscal deficit at 3.5% of GDP and focus on reviving investment cycle driven by infrastructure and rural development inspite of various domestic and external challenges. Various initiatives that have been initiated by the Government like “Make in India’, “Skill India”, “Start up India” will move the economy in right direction. Further relaxation in ease of doing business is positive for industry and entrepreneurs.” 

Ms. Mallika Srinivasan, Chairman and CEO, Tractors and Farm Equipment Limited (TAFE)

“The Budget recognizes the serious rural distress in the country over the last two years and the need for a robust rural sector to achieve sustainable agricultural growth.    Towards this, the strong emphasis on irrigation - particularly the focus on implementation of irrigation projects worth Rs.17,000 crores during the current financial year and an outlay of Rs.86,500 crores during the next five years - is very encouraging.  In addition, a Rs.60,000 crores initiative towards conservation of ground water is laudable.  It is heartening to note that an emphasis on MNREGA has been retained although the increase in allocation is modest, as original budget allocation for 2015-16 was around Rs.35,000 crores.  We hope to see improved implementation on MNREGA, as the implementation on the ground during 2015-16 was disappointing.   The e-platform initiative and online procurement by FCI will give a fillip to farmer realization and transparency.  This will be a step towards Direct Benefit Transfer (DBT) for 100% of the subsidies to reach the farmers. Consistency of this approach and articulation of a clear roadmap has a clear potential to deliver on the Government’s Vision to double farm income by 2020.

The Rs. 2.87 lakh crores allocation to Gram Panchayats, electrification of villages, the emphasis on state and rural roads will all go towards strongly shifting the growth agenda back to a more holistic balanced approach for India. It is somewhat disappointing that the budget veers away from the stated long term objective of a reduction in corporate taxation and the enhancement of taxation on dividends is likely to be a dampener on entrepreneurship, investment in mutual funds and industrial growth. Overall we welcome the agri and rural focus in the budget and we believe that with the support of a good monsoon we can look forward to a more robust agri and rural growth in 2016-17.”

Mr. Ashok P Hinduja, Chairman, Hinduja Group of Companies (India)

"The Budget is pragmatic and growth-oriented. The Government’s commitment for retaining the fiscal deficit at 3.5% will have sobering effect on the interest rate in general and on the yields of government and corporate bonds in particular. This will place our economy in the double digit growth trajectory. Coupled with agriculture, rural and infrastructure spending including roads and highways, the economy will have a resultant effect  of bottom-up demand generation and job creation. The auto sector will stand to benefit by the proposed amendment to the Motor Vehicles Act to allow the private sector participation in the passenger vehicle segment.  Amnesty window announced for unaccounted money is a good initiative. However, tax on dividend above Rs. 10 lakh is a big disincentive for promoters / large investors."


Mr Suresh KV, Country Head of ZF in India and Head of ZF India Pvt. Ltd
“The much awaited budget presented by Finance Minister, Mr Arun Jaitley shows immense promise.
A net investment of Rs 97, 000 crore in the road sector has been proposed and a total of nearly 10, 000 kms of national highway has been approved by the government. With this proposed advancement in the infrastructure, the country shows that it is now ready for the advent of smart transport options. These initiatives are truly the right ones for stimulating the off- highway products where ZF is present and will be glad to contribute.

Also, the dedicated R&D team of ZF will continue their endeavor to find suitable innovative and futuristic technologies that can be introduced in India. Additionally, the setting up of 1500 multi skill training institutes would help auto components manufacturers in acquiring skilled talent. The Finance Ministry has also promised to enforce the necessary revisions in Motor Vehicle Act and open up the road transport sector in the passenger cars segment. All in all, we at ZF are looking forward to this financial year as this budget gives us the motivation to continue on our path of futuristic and sustainable growth.”