The pandemic took a toll on the economy in 2019, and the auto sector fell into an unbelievable state. At the same time, the new rules implemented by the government and the compulsion to introduce EVs put pressure on the companies. Tomorrow the Union Budget 2022 is to be announced in the country by Finance Minister Nirmala Sitharaman, and this budget is seeing a ray of hope for the automobile sector.
You will recall that since the pandemic, auto companies have been battling between sales and demand due to the lack of semiconductor chips in the auto sector, and now it needs improvement. At the same time, in the coming years, there will be a strong adoption of electric vehicles, which will include two wheelers, three wheelers in particular. Many startup companies have entered this segment. Let us tell you, what announcements can be made for the auto industry in this budget.
Production-Linked Incentive
The government launched the PLI (Production-Linked Incentive) scheme in 2021 to promote local manufacturing. According to this scheme a company will be eligible for certain incentives for five years. However, for this it was necessary to fulfill certain criteria. In the new budget, it is expected that small and medium-sized companies with low turnover will also be included in this scheme. This will encourage many startups which are currently not able to take advantage of it due to low turnover.
Fame-II Scheme
Let us tell you, in 2021, the government extended the FAME-II scheme for electric vehicles till 31 March 2024. At the same time, it is expected to take this scheme forward in this budget, which will help in keeping electric vehicles more economical. The FAME-II scheme allows subsidies and tax exemptions for certain electric vehicles.
EV Components GST
Some experts believe that the GST rates for EV components may be reduced in this budget, currently the GST rates for EV components are still between 18 and 28 percent. In such a situation, the EV industry wants the government to give some relief here, so that manufacturers can reduce costs, and the prices of electric vehicles can come down.