Union Budget 2024: Key Highlights for The Automobile Industry

The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, has laid out a comprehensive roadmap for India’s economic growth, focusing on key areas such as Gareeb (poor), women, youth, and farmers. This budget holds significant implications for the automobile sector and motor sport in India, with various measures aimed at boosting economic activity, creating jobs, and providing relief to the middle class.

EV Industry

The finance Minister has proposed a complete exemption from custom duties on lithium- which is a key component for many sectors, including the electric vehicle (EV) industry. Apart from lithium, there is also complete exemption on copper, cobalt, and other rare Earth elements. She has suggested reducing the basic customs duty (BCD) on these materials.

The budget has allocated ₹5,000 crore for the development of EV infrastructure, including charging stations and battery swapping facilities. Additional incentives have been proposed for manufacturers of electric and hybrid vehicles to promote sustainable transportation. 

Automobile sector

GST on automobile components has been reduced from 28% to 18%, making it more affordable for manufacturers and consumers. In the financial year 2023-24, India produced approximately 10.7 lakh commercial vehicles, 49 lakh passenger vehicles, 9.9 lakh three-wheelers and 214.7 lakh two-wheelers.

Motor Sport in India

The Union Budget 2024 includes a provision for development of new racing tracks and upgrading existing ones to international standards.  Financial support will be provided for organizing international motor sport events in India. It will help to boost tourism and the local economy.

In the training and development program, the budget proposes training young talent in motor sports, including scholarships and partnerships with international racing academies.

The PLI and FAME II scheme

The Production Linked Incentive (PLI) and Fast Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) schemes have helped the automobile industry to witness significant growth in the year 2024. The PLI scheme has already attracted an investment of ₹67,690 crore for the automobile and auto component industry. Till March 2024, capital of ₹14,043 has already been invested.

The PLI scheme has a budgetary layout of ₹25,938 crore for the automobile and auto industry from FY23 to FY27. This scheme has been classified into two categories namely ‘Champion OEM Incentive Scheme’ and ‘Component Champion Incentive Scheme’.

The government has incentivised a total of 1.66 lakh electric four wheelers and 11,70,200 electric two wheelers till now. All this has happened under the FAME II scheme of the government.

According to the Economic Survey 2023-24 tabled in Parliament on Monday, the PLI scheme for automobile and auto components has attracted a proposed investment of ₹67,690 crore. 

A capital of ₹14,043 crore has been invested till end-March 2024. Applicants have proposed employment generation of 1.48 lakh, against which 28,884 of jobs have been generated till March 31, 2024, the Economic Survey 2023-24 stated. 

Finance Minister Nirmala Sitharman on Monday tabled the Economic Survey 2023-24, which highlighted that the Indian economy is “on a strong wicket and stable footing”.

Infrastructure Development

The budget allocates significant investments in infrastructure, which is crucial for the automobile sector. The development of 12 industrial parks under the National Industrial Corridor Development Programme and the launch of Phase IV of PMGSY (Pradhan Mantri Gram Sadak Yojana) to provide all-weather connectivity to 25,000 rural habitations are key highlights. Additionally, financial support for irrigation and flood mitigation projects with an estimated cost of ₹11,500 crore will enhance the infrastructure landscape.

New & Old Tax Regime Details

Budget 2024 has increased the standard deduction under the new tax regime to ₹ 75,000. The family pension deduction has also been increased from ₹ 15,000 to ₹ 25,000. With the revised tax structure the taxpayer will save ₹17,500. 

The survey, released a day before the budget presentation on July 23, projected a real GDP growth of 6.5-7% in FY25.

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Conclusion

The Union Budget 2024 presents a comprehensive plan for India’s economic growth, with a strong focus on infrastructure development, job creation, and sustainable practices. The various measures announced in the budget will have a significant impact on the automobile sector and motor sport in India, driving demand for vehicles and related services and creating new opportunities for businesses. The government’s commitment to fostering economic growth and providing relief to the middle class is evident in the budget’s key highlights, making it a promising year for the automobile sector and motor sport in India.

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