2023 Union Budget: Here’s What You Can Expect

The Union Budget 2023–24, which Finance Minister Nirmala Sitharaman is scheduled to present on February 1st, is a hot topic across the entire nation. The automotive industry, like every other industry in this nation, has high expectations for this year's budget. Since 2019, there have been more than 295 million registered vehicles in India, according to Statista. The automobile industry in the nation is one of the biggest in the world. It was the world's top two-wheeler manufacturer in 2022. In the domestic market, about 13 million two-wheelers were sold in 2017.

The Indian 2023 Union Budget will be important for the auto sector. Given the government's emphasis on clean energy, several actions can be anticipated to encourage further use of electric vehicles (EVs) and improve the infrastructure growth for the associated ecosystem.

In the financial year beginning April 2023, two-wheelers and tractors are expected to grow at rates of 6-9% and 4-6%, respectively, according to a report by the domestic credit ratings agency ICRA. Passenger and commercial vehicle volumes are also expected to increase by 6-9% and 7-10%, respectively.

However, the research also noted that the two-wheeler market is still experiencing difficulties because its volume is still below its pre-COVID high levels. Although the recent holiday and wedding season raised hopes for better off-take, it is still too early to tell whether demand attitudes have recovered in a sustainable way.

In the auto industry, the incentive for alternative fuel is one of the most important expectations, along with the rationalization of the GST and subsidies for EVs.

Piyush Parag, DVP of Fundamental Research, Sharekhan by BNP Paribas said, “No major direct benefit is expected for Internal combustion segment ( ICs),  while the incentives for promotion of clean fuel (CNG, hybrid, hydrogen, EVs, fame policy etc) etc are key thing to watch out in upcoming budget.  Broader provisions for investment in infrastructure and allocations on rural schemes etc would be noted down for macro readings.”

Kishor Ostwal, CMD, CNI Research believes on the upcoming India budget, “Auto being representative of the economy will be a top priority for Government EVs will get extended benefits.”

Even Arun Agarwal, Vice President, of Kotak Securities agreed on the fact that EVs will get additional support, “Given Government’s focus towards clean energy, some measures can be expected to facilitate further electric vehicle (EV) adoption and to support the development of EV ecosystem in the country. Apart from this, initiatives to support rural income would also indirectly benefit some segments within the auto industry (mainly entry-level two-wheeler segment and the tractor segment).”

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