Auto sector's expectations from the Union Budget

According to a report by Sharekhan, the auto motive sector forms around 10 per cent of any country's gross domestic product (GDP) across the globe. At the time of recession all the big economies across the world pushed its auto mobile industry to club with the GDP growth motives. Recently macro headwinds like increasing interest rates, commodity price hike and fuel prices have created a challenging growth ambiance for the Indian auto mobile industry.

Lets look at the major highlights of the last year's Budget especially for the automobile sector. They are firstly Ad-valorem component of the excise duty on the big cars, multi utility vehicles and sports utility vehicles raised by 2 per cent totaling to 22 per cent. However, the specific component of duty on these cars was untouched. Secondly, the weight reduction on expenditure incurred on the in house R&D has been raised to 200 per cent which was 150 per cent. Thirdly, the weight deduction on the payments made to the research associations, colleges, universities, national laboratories and other scientific research institutions has been raised from 125 per cent to 175 per cent.

The budget failed to meet the expectations of the auto mobile industry , Pawan Goenka, President Society of Indian Automobile Manufacturers (SIAM) said that these steps were not able to strike a good balance between pushing reforms, focus maintaining on physical or social infrastructure but also turning back to the financial responsibility in a measured manner.

The report also states that the automobile sector in 2010-11 Budget wished for reduction in excise duties between smaller personal vehicles and the CVs. It was also expected to witness slash on high excise duty which was levied on personal vehicles. The auto mobile sector is hoping to cash on this year's budget, as per the sources the associates from the Indian auto mobile industry has meet the ministry and expressed the preference in the budget.

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