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Anoop Menon
Anoop is an avid consumer of automotive news and food. On most days, you can find him scouring the internet or immersed in a book. ... Read More
The Indian automotive market has been through some turbulence in recent times, but the upcoming Union Budget 2017 could come with stimuli to stabilise the industry. According to Dinesh Supekar, Partner at PricewaterhouseCoopers and automotive industry expert, the implementation of a programme to scrap old cars could be a stimulus that can be a game changer for the industry. He also suggested that the auto budget 2017 could include a simplified GST structure with up to three rates for accelerating industry growth.
Speaking at a live chat with Business Standard, Supekar suggested that this three-tier GST structure for small cars, two-wheelers and other vehicles could help lower the tax burden on the industry. Another big move that could change the industry landscape can be an incentive scheme to promote scrapping of old cars. He agreed that growth in commercial vehicle sales have been surprisingly stagnant despite huge investments by companies, and that future prospects for this segment would be dependent on how the government pushes its economic growth plan. Also Read: Auto Budget 2017: Changes in Union Budget that can benefit used car industry
Supekar noted that new regulations related to fuel efficiency, emissions and safety could have significant impacts on the industry. These norms will trigger greater investment in new technologies for compliance. He also suggested that carburetted two-wheelers could go obsolete due to these regulatory changes, and manufacturers would need to plan out new products, vendors and investments accordingly. While a cut in service tax could definitely help promote demand in the automotive segment, Supekar suggested that service tax could actually increase with the GST regime, and with the 2017 budget itself. However, a cascading effect due to this higher tax could be avoided if the current tax structure, which includes excise duty, CST, VAT and NCCD, is simplified and rationalised. Also Read: Auto Budget 2017: What to expect for the automobile industry
Speaking about electric cars and the issue of air pollution, Supekar noted that there are already some electric vehicles in the country but they have not been successful. The absence of a proper ecosystem and support structure, which includes charging stations, is a major reason for the failure of electric vehicles in India so far. Hybrid cars have seen somewhat better success, but they are also priced at a significant premium. This high price point prevents hybrid vehicles from entering the mass market and seeing more widespread acceptance.
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