Though Budget 2022 did not provide much relief to the automobile sector, it did draw attention to some other areas that could encourage automakers in various sectors.
see photosUnion Budget 2022 was presented by Finance Minister Nirmala Sitharaman in Parliament today.
Union Budget 2022 presented by Finance Minister Nirmala Sitharaman in Parliament today contains major announcements for the automobile industry, which will directly or indirectly affect the sector. While the budget did not provide much relief to the automobile sector, it did draw attention to some other areas that could encourage automakers in various sectors. These include a new battery swapping policy, electric vehicles for public transport, and opening up of defense R&D to private players to develop auto components. Let’s take a look, shall we?
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New Battery Swapping Policy
This was perhaps the biggest announcement made by the Finance Minister, as a new battery swapping policy will soon be introduced in the country, which will benefit the entire EV ecosystem. The move will allow major EV players, OEMs and charging infra companies to set up battery-swapping stations and technology in the country, and in the process, allow for a shift from ICE-powered vehicles to electric vehicles.
Electric vehicles for public transport
The Finance Minister also announced the implementation of clean and electric vehicles in the commercial vehicle sector. The move will help auto companies to produce and manufacture electric buses and electric commercial vehicles for public transport, thereby reducing tolls on fossil-fuelled vehicles. In addition, public transport that runs on battery-powered vehicles will certainly benefit from lower running costs, as well as a drop in emissions.
Read also: Union Budget 2022: National Highway network to be expanded to 25,000 km in 2022-23
Opening up R&D defense to private auto component manufacturers
This is perhaps another major announcement made earlier today, as private automakers can now bid to supply auto components to our defense arsenal. The move could provide a new revenue and growth segment to the auto component players. However, till date, car manufacturers such as Tata Motors and Mahindra have successfully delivered products to the armed forces.
expansion of national highways
Another important announcement made by the Finance Minister was the allocation of ₹20,000 crore in infrastructure projects, movement of people and goods. It will also contribute to the expansion of the National Highway network to 25,000 km in 2022-23 with a view to improve the road conditions in our country, resulting in improved productivity and fuel efficiency. Effectively, the protection of vehicles from improved roads will also have a positive effect, thereby reducing the cost of repairs.
Read also: Union Budget 2022: Finance Minister proposes battery swapping policy for electric vehicles
Create demand for new vehicles in the CV space
Providing a major boost to the commercial vehicle segment, Budget 2022 also announced an allocation of ₹20,000 crore for infrastructure projects, creating a demand for new CVs. The investment will help the CV sector, especially at a time when the sector has been hit by the pandemic.
MSP payment to increase vehicle demand
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Budget 2022 also mentions minimum support price or MSP payment of ₹2.73 lakh crore, among other benefits, to aid the agriculture sector, which could potentially improve the demand for vehicles in rural India. It is expected that the announcement may improve the response from rural areas, as the two-wheeler and entry-level car segment comprises a major chunk of automakers’ sales.
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