2021 Budget Reactions From Indian Auto Industry

Added in: News

The Union budget was introduced in the parliament yesterday, the 1st day of February 2021. While everyone has different opinions and takes on what is good and what is not about the budget, here’s what the auto industry had to say.


Ashish Gupta, Brand Director, Volkswagen Passenger Cars said “The Budget 2021 as announced by the Hon’ble Finance Minister has the potential to revive the economy at large. The focus on the six pillars, with greater impetus on healthcare, infrastructural & connectivity development and rural economy will have a positive impact on the businesses. With respect to the auto sector, increase in customs duty on certain auto parts would impact the input cost, although we’re yet to assess the financial impact. On the voluntary scrappage policy, strict governance on the fitness test would determine the benefit on the environment and pollution reduction.”  

Volkswagen polo TSI review


Mr Vinkesh Gulati, President FADA ( Federation of Automobile Dealers Associations ) said “FADA is happy to note that the Hon’ble Finance Minister has finally announced the much-awaited Scrappage Policy, though voluntary to phase out old vehicles. If we take 1990 as the base year, there are approximately 37L CVs and 52L PVs eligible for voluntary scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road. We still need to see the fine prints to access the kind of incentives which will be on offer and thus have a +ve effect on retail. The 6,575 km Highway works proposed in Tamil Nadu, Kerala, West Bengal and Assam and another 19,500 km work for Bharat Mala project will definitely add fillip to the much-needed revival of Commercial Vehicles especially M&HCV segment.

Government’s reduction of customs duty on steel products to 7.5% will benefit Auto OEMs. We hence expect the benefit to trickle down to end customers thus helping in boosting demand. While we expected disposable income for individuals to increase with the enhancement of IT slabs and depreciation benefit on vehicles for individuals, the same has not been taken into consideration.”


Ruchit Agarwal, Co-founder and CFO, CARS24 said “The 2021 Union Budget is a big booster for spearheading the economy’s growth. We are glad the Government has announced an investment in road infrastructure coupled with the announcement of scrappage policy. These will bode well for the auto industry as they will help it achieve the twin objectives of boosting demand whilst recycling old and polluting vehicles in our country. While we look forward to the minute details of the policy, ensuring seamless execution will be key. Additionally, with the government allowing one-man companies and increasing the threshold for the definition of small companies, we expect and hope that used car dealers in India will consider shifting from a sole proprietorship to companies. This will make them further organized and open up different forms of financing markets for them. Extension of one year tax holiday will also prove to be a welcome move for start-ups in India. We are sure that the announcements made under 2021 Union Budget will help sustain the pace of growth witnessed in the last few months in the auto industry.” 


L Viswanathan, Partner, Cyril Amarchand Mangaldas said “The announcement of the Scrappage Policy is expected to significantly boost the auto industry as also contribute to a clean India. It is expected that this policy would nudge electric vehicles which would also be a boost for manufacturing in India and will trigger investment in clean technology. The success of this policy would be felt on multiple fronts, from giving a fillip to the automobile sector, boosting manufacturing in India and also reducing our fuel import bill.”

Tata Motors

Guenter Butschek, CEO & MD, Tata Motors said “Budget 2021 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. The significant increase in overall allocation towards capital expenditure has been complemented with comprehensive measures to catalyse multiple levers- focus on rural, infrastructure investment, the impetus to manufacturing, social welfare, entrepreneurship and digital – to enable overall holistic development.

Tata safari unveiled

For the automobile sector, which is a significant contributor to India’s GDP, there are multiple welcome announcements including a voluntary vehicle scrapping policy to phase out old and unfit vehicles, augmenting public transport system in urban areas, continuing focus on adoption of cleaner fuels, and enhancing outlays for developing road infrastructure and expanding the Swachh Bharat Mission.”

Euler Motors

Saurav Kumar, Founder and CEO, Euler Motors said This year’s budget is a directional push to move towards clean energy and transition towards a green economy. The outlays to tackle air pollution and boost to non-conventional energy sectors will be key to reduce dependence on fossil fuels and power the industrial sector and electric transportation. The announcement of the Hydrogen Energy Mission is a step closer for generating power through green sources and fulfil charging requirements of EVs in the future.

The auto industry welcomes the scrappage policy which will pave way for higher adoption of new vehicles to reduce emissions and contribute to sustainable mobility. In the commercial segment, there are large numbers of old vehicles and the scrappage policy will boost adoption of low emission and energy-efficient vehicles, by phasing out old models. We also look forward to the Government’s continued infrastructure push with a focus toward improving roadways in India. These will provide an impetus towards modernization and drive more consumption in the auto segment.

It is also heartening to the continued support to MSMEs and start-ups with measures to ensure ease of doing business, including a seed fund to support early-stage start-ups and an investment clearance and advisory cell to widen their scope and growth.  We are now excited to witness how the industry makes the most of these initiatives for entrepreneurship and drive innovation to further the Start-up India Vision.

Leave a Reply

Your email address will not be published. Required fields are marked *