Auto Track Q3 FY 21

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The government adopted a visionary approach in Union Budget 2021 with a stance towards infrastructure building. India is eyeing electric vehicle ecosystem, where the budget of R&D would further enhance its development and localisation towards efficiency improvement and increasing competitiveness.

For an industry that has seen a prolonged economic slowdown, devastated by the COVID-19 pandemic and hard-pressed by job losses, there is a need for multiple demand boosters for the industry to witness stronger growth in 2021-22. Overall, a macroeconomic growth is expected to translate into induced demand in the auto sector.

Several key announcements were made for the automotive sector in the Union Budget 2021

  • An amount of INR 2,217 crore was set aside for 42 urban centres with a million-plus population for clean air.
  • Customs duty on steel products was reduced to 7.5%. This would benefit the original equipment manufacturers (OEMs) and trickle down to end customers, thus helping boost demand.
  • A few direct announcements towards the automotive sector’s tax structure to make vehicles and bikes more affordable for the end consumer could have been beneficial:
    Announcement and impact
  • Highest-ever capital expenditure of INR 1.08 trillion to the Ministry of Road Transport and Highways (MoRTH). The focus is on building safe, quality and clean transportation system

Other key highlights from the publication

Domestic Sales Trend

Scaling up EV adoption in India: The Indian automobile market is at the nascent stage of adopting EVs. Many global players are looking to enter the market in the coming years, but there is a need to establish a network of vendors, build infrastructure, R&D facilities to enable their smooth entry into the market.

Auto component after-market in India: There is a growing importance of the aftermarket segment specifically in specific micro-market clusters, which includes not only new vehicle sales, but also the aftermarket. The aftermarket in FY20 remained stable despite a downturn in the industry. The turnover of the aftermarket stood at INR 69.381 crore with a marginal growth of 2.8% over the previous year. 

M&A in the industry:

M&A in the industry