Budget 2016: Policies for auto sector remained largely unchanged, says Renault India's Sumit Sawhney

The government has succeeded in ensuring that the Indian economy has held its own despite the prevailing uncertain environment and global head-winds, said Sumit Sawhney, Country CEO & MD, Renault India Operations.

He said at a broad level, Budget 2016 is constructive and will be instrumental in laying the foundations for long-term sustainable growth. The 9 pillars on which the budget is based on addresses measures for growth, while keeping the fiscal deficit within the set limit of 3.5% and curbing inflation for FY 2016-17.

"The Union Budget 2016 rightly focuses on the core issues which needed attention, including agriculture, social programmes, rural development, education with skill development, infrastructure, financial reforms, policy reforms in terms of ease of doing business, fiscal discipline and tax reforms. Fundamentally all these measures will go a long way in stimulating the domestic demand, which clearly is the need of the hour, especially in wake of the prevailing global uncertainties," he said.

Sawhney said as much as was desired, the budget has rightly focused on positive measures to give impetus to infrastructure growth. "Although we will have to study the fine print of the budget in terms of clear programs to boost investment, manufacturing and skill development, the directional focus is in sync with the overall expectations to boost growth. This budget will go a long way in further bolstering India’s position in the global economy," he added.

Perspective on the Automobile Sector

"The budget clearly focuses on a long-term vision, aimed at high growth, together with emphasis on the fiscal deficit, and keeping big bang investments in check. But, policies for the automobile sector remained largely unchanged," Sawhney said.

The automobile industry features in the ‘Make in India’ program, and has been identified as one of the 25 thrust sectors outlined for growth. Together with its role in making India a manufacturing powerhouse, the common hope across the automobile industry was that the government includes some industry friendly policy decisions which will build confidence, he added.

Citing pollution and the traffic situation in cities as a matter of concern, there is a proposal to levy a cess of 1% on small, petrol and CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs," Sawhney said. 

"While doing this, the industry was hoping that the government should have taken progressive steps such as introducing a ‘scrappage incentive scheme’, to keep older cars off the roads and would not have impacted the industry. Such a policy will benefit the environment, reduce fuel consumption and also propel further demand for greener and efficient vehicles," he added.

The industry was also hoping for excise duty reduction to be reintroduced and a roadmap on GST implementation, as a unified excise and taxation structure will go a long way to benefit the industry.

Although the budget didn’t have much for the automobile sector, we are hopeful for some pro-business policies on a continual basis to benefit the industry.

A positive to the auto sector is the investments and reforms in agriculture and infrastructure sectors, which will have a rub-off effect on the core sectors that drive the economy, he said.