The 2023 Budget has several key highlights for the auto industry in general with the key message being to make in India and also to strive for a greener future. With changes in the income tax structure, there would be more disposable income and car sales would also benefit with a possible increase in small and midsize car sales as a result. Along with that, one of the direct effects would be on EVs with a focus on promoting green vehicles with the removal of customs duty on the import of specified goods and machinery required to manufacture lithium-ion batteries for EVs. Hence, prices of EVs made in India would be reduced and increasing demand for them along with encouraging more carmakers to enter into EV manufacturing in India. Currently, only a few car-makers offer locally made EVs with more expected to join in from the next few years.
The other big step is regarding an outlay of ₹19,700 crores where the National Green Hydrogen Mission will “facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuels”. This is in line to reduce our fuel bill and also look at alternatives along with EVs. Hence, as a result, hydrogen-powered mobility would be looked at as a possible solution in the future with many car-makers showcasing their interest to bring alternative fuel vehicles by displaying them at the Auto Expo.
The vehicle scrappage policy was further strengthened with more funds allocated to boost efforts in scrapping old vehicles under the central government.
For luxury car-makers however, there is news of a customs duty hike from 60 percent to 70 percent for CBU or completely built units including cars with invoice value less than $40,000 hence, imported cars would be even more expensive now. Premium cars would also be more expensive with SKD (semi-knocked down) vehicles also having an increase from 30 per cent to 35 per cent in customs duty. This will mean high-end car prices would increase soon with car-makers like Mercedes-Benz, BMW and Lexus having to adjust prices of some of its cars which fall within the CBU range.
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