sustainable rural economic growth.
• Reduction in customs duty on copper as well as some other metals to 15%.
• Consortium of banks formed to ensure speedy conclusion of loan agreements and implementation of infrastructure projects.
Budget impact:
Tractor manufacturers will benefit from increased demand for tractors once they pass on the benefits of excise duty exemption to the end consumers. The industry has just come out of a three-year slump, having registered a volume growth of 10% in FY04. Thus, the current exemption is likely to give a further boost to demand. The target of doubling the agricultural credit in three years is also likely to make more funds available to the farmers for investment in farm mechanisation.
With major auto companies spending sizeable amount on product development and in-house R&D expenditure in recent times, deduction of 150% allowed on the same will encourage further R&D investments. With cost efficiency no longer the domain of any single player, future survival will depend upon the capability to offer more technologically competent products. From this perspective, the current move is a step in the right direction.
The government has pushed for speedy implementation of infrastructure projects, which is a good sign for the auto industry, especially the CV manufacturers. In line with the international experience, improvement in road infrastructure will translate into increased demand for higher tonnage CVs.
Reduction in customs duty on alloy and non alloy steel would have a positive impact on the auto components and automobile industry. However, it would be nullified to some extend by increase in excise duty on steel.
R&D sop will also boost investments in technology related areas. Cess of 2% may result in increase in end product prices if the manufacturers decide to pass on the hike.
Rural thrust is likely to result in long term increase in demand of automobiles. Favourable economic scenario, renewed impetus on infrastructure and thrust on rural economy are likely to sustain healthy growth rates across segments.
Overall, no significant impact for the automobile industry (other than tractors).
• Reduction in customs duty on copper as well as some other metals to 15%.
• Consortium of banks formed to ensure speedy conclusion of loan agreements and implementation of infrastructure projects.
Budget impact:
Tractor manufacturers will benefit from increased demand for tractors once they pass on the benefits of excise duty exemption to the end consumers. The industry has just come out of a three-year slump, having registered a volume growth of 10% in FY04. Thus, the current exemption is likely to give a further boost to demand. The target of doubling the agricultural credit in three years is also likely to make more funds available to the farmers for investment in farm mechanisation.
With major auto companies spending sizeable amount on product development and in-house R&D expenditure in recent times, deduction of 150% allowed on the same will encourage further R&D investments. With cost efficiency no longer the domain of any single player, future survival will depend upon the capability to offer more technologically competent products. From this perspective, the current move is a step in the right direction.
The government has pushed for speedy implementation of infrastructure projects, which is a good sign for the auto industry, especially the CV manufacturers. In line with the international experience, improvement in road infrastructure will translate into increased demand for higher tonnage CVs.
Reduction in customs duty on alloy and non alloy steel would have a positive impact on the auto components and automobile industry. However, it would be nullified to some extend by increase in excise duty on steel.
R&D sop will also boost investments in technology related areas. Cess of 2% may result in increase in end product prices if the manufacturers decide to pass on the hike.
Rural thrust is likely to result in long term increase in demand of automobiles. Favourable economic scenario, renewed impetus on infrastructure and thrust on rural economy are likely to sustain healthy growth rates across segments.
Overall, no significant impact for the automobile industry (other than tractors).