- 01 Feb 2022
- ICICIdirect Research
Budget 2023- Impact on Auto sector
From the auto sector perspective, the union budget is growth oriented in nature with focus on capital expenditure and is positive for commercial vehicle segment, Electric Vehicles and tractor space. The key takeaways from the budget in the auto space include:
(i) Government stays committed to augment farm income via robust allocation for food grain procurement under MSP regime (₹ 2.73 lakh crore), capex spend on irrigation and support to Start-Up ecosystem to drive technology application in farming;
(ii) To further promote electrification, government has proposed to come out with Battery Swapping Policy which also includes the concept of energy/battery as a service. This will help in developing requisite charging station ecosystem. Government plans to promote private sector to incur required capex in this domain.;
(iii) Budget also includes Robust allocation of ₹ 7.5 lakh crore (up 35.4% YoY) as capital expenditure for FY23E, a big positive for commercial vehicle space, especially M&HCV segment &
(iv) Concessional tax rate for new manufacturing set-ups at the rate of 15% is extended by 1 year. It primarily implies that eligible commissioning date has been extended from 31st March 2023 to 31st March 2024. It is expected to drive private capex going forward.