Union budget 2023-24: Key takeaways for Indian auto industry

India’s Finance Minister, Nirmala Sitharaman presented the Union budget 2023-24 with a strong focus on green energy and making electric vehicles affordable to the masses. Interestingly, the government has also increased the income limit from 5 lakh to Rs 7 lakh in the new regime.

Here are the top highlights for the auto sector in the Union budget 2023-24

Key Takeaways:

• EVs to get cheaper
• Updates to Vehicle Scrappage Policy
• National Green Hydrogen Mission

2023 is here and so is this year’s Budget. Finance Minister Nirmala Sitharaman commenced the Budget with the exact words “first Budget of Amrit Kaal”. The Budget for this year is a crucial one, to say the least since this will also be the last Budget before the 2024 elections. For this matter alone, the Budget has a lot of interest surrounding it.

Although the Automotive sector in India struggled and stumped during the pandemic, the industry came back and has ever since registered good growth. Here are the key highlights from the 2023 Budget with respect to the automotive industry:

EVs to Get Cheaper

The Finance Minister has announced that customs duty will be removed for goods and machinery that are imported to India for the manufacturing of Lithium-ion battery packs. As we all know, a Lithium-ion battery is the most integral component of an all electric vehicle. This is a huge step in making all electric cars, bikes, and scooters affordable as most of them use components from outside India. However, this will only be applicable to EVs built in India. So expect Budget all-electric cars and two-wheelers in India to get more affordable in the future.

Updates to Vehicle Scrappage Policy

More funds will be allocated from the central government towards the vehicle scrappage policy. The Finance Minister also mentioned that state-wise announcements to the scrappage policy will also follow later. The Vehicle Scrappage Policy was announced in the 2021-22 Budget and as it stands now, it will be ramped up with more capital from the central government. Apart from that, states will also be given all the support to help them scrap old vehicles and ambulances.

National Green Hydrogen Mission

The Union Budget is allocating a huge fund towards the collective goal of achieving net zero emissions. As a part of that, the Finance Minister has announced Rs 19,700 crore of allocation to produce green hydrogen through the National Green Hydrogen Mission. The government targets to reach a production capacity of 5 million metric tons of hydrogen within 5 years by 2023. This will kick-start hydrogen-powered mobility in India which is taking a step back in India and elsewhere due to the onslaught of EVs.

Other Key Announcements:

• Income tax rebate increased from Rs 5 lakh to Rs 7 lakh per annum
• New personal income tax slabs announced
• Rs 75,000 crore for 100 infrastructure projects
• Net Zero carbon emission by 2070