General Motors India MD Lowell Paddock comments on the Indian budget 2013
">Budget reaction 2013: General Motors India
The budget is encouraging due to its focus on agriculture, irrigation, education, skill development, health care and infrastructure. Since it addresses some of the concerns of the industry in general, it should help economic growth going forward.
As far as the automotive industry is concerned, the budget did not meet the expectations. We were expecting the roll back of the excise duty imposed last year. Instead there is an increase of 3 per cent excise duty on SUVs and there is also a hike in customs duty of 25% on high end imported vehicles. These hikes are not on the expected lines and will impact the sale of SUVs. Having said this, we have to see the fine print to understand the clear definition of SUVs. The automotive industry is one of the growth drivers of the economy with its backward and forward linkages to generate multiple and substantial employment opportunities any duty concessions would have helped the industry to register some growth as the industry has already started slowing down due to high interest rates, fuel prices, commodity prices, negative market sentiments etc. Some concessions announced for electric vehicles and increased allocation for the road transport sector are welcome decisions.
Some of the other announcements made by the finance minister for manufacturing, R&D activities, regulatory authority to monitor road projects, focus on skill development etc should enhance the competitiveness of the Indian industry. The intention to further promote the development of infrastructure, particularly in rural areas, is a positive step. The government's commitment to continue with its reform process is likewise a positive step.
Similarly, the investment and demand stimulating measures in manufacturing especially the investment allowance for two years, purchase of buses under JNNURM, movement on GST and some positive action on industrial corridors are also welcome decisions. These proposals, if implemented effectively, should have a positive impact on industry and the economy as a whole. The challenge now is the implementation of the proposals. Our hope is that the market will respond favorably.
