Key highlights for automobile share:
There weren’t so many major announcements made for the automotive sector in the Budget 2022. But, there was one major announcement for the EV space. While other announcements have an indirect and limited positive impact on the sector.
The battery swapping policy is a great step and will encourage companies to up their investment in electric vehicles. At the same time, public transport will benefited from lower operating costs. Along with a reduction in emissions with the focus on clean tech and EVs.
Budget 2022 announcements for opening of defence R&D for private players will benefit the auto component players in a limited manner. But it will allow them to open a new business model. Infrastructure development is also expected to have a positive impact on the commercial vehicles sector. With Rs 20,000 crore investment and 25,000 km expansion of National highways should create demand for new vehicles.
Budget 2022 states, the impact of the battery swapping policy on electric 2-wheelers is difficult to ascertain at this stage. As some companies in the low-speed EV segment offer detachable batteries presently. But many players in the larger high-speed segment have formulated their vehicles around the fixed module design.
With the Finance Minister ending her Budget 2022 speech; it would be fair to say that the expectations of the automotive industry haven’t been met entirely.
The announcements about to invest in new infrastructure projects. As well as the focus on the rural economy will also have a positive long-term impact on the automotive sector. But, again the impact will not be enough to change the overall business sentiment.
Key issues such as incentives for new electric vehicle adoption. Along with reduction in taxation and duty structures have been left almost unchanged. Also, there was no major announcement to help industry overcome the rising input costs. It made difficult that, vehicles across any segment would get cheaper. Instead, continuous pressure on maker could lead to increased cost in short to medium-term.