INDIA REPORT
As part of its 2023 Budget, the government has reiterated its focus on capital expenditures, the vehicle scrappage policy, and a reduction in customs duty for electric vehicle components that is designed to stimulate new vehicle sales. A reduction in customs duties and a plan to replace older, polluting vehicles will boost the adoption of green mobility.
“The increase in capex on infrastructure and the emphasis on green growth will help the mobility sector,” said Sudarshan Venu, MD, TVS Motor Company. “This budget gives something to everyone, from rural India and start-up India, to middle-class India and digital India. It is about inclusive growth and building on the recovery we are seeing after the pandemic. It strikes a fine balance between growth and fiscal prudence.”
Commercial Vehicles. This Union Budget has allocated INR 10 lakh crore for capital investments and INR 79,000 crore for affordable housing. At the same time, the government has increased the capital expenditure on roads, railways and airports by 33%. This move will ensure continuation of the recovery cycle and is likely to improve CV demand by about 25%. Major beneficiaries will be heavy-duty multi-axle vehicles and tippers.
Furthermore, the LCV industry is expected to gain from the Rs 75,000 crore investment in enhancing first- and last-mile connectivity. Apart from it, the PM Awas Yojana that is planned for boosting rural housing would create more jobs and bring more projects for the CV industry
Green Energy. The government has provided INR 19,500 crore outlay for green hydrogen development. This will benefit the future of heavy-duty trucks and the logistics industry.
On lithium batteries, the government has also reduced the customs duty from 21% to 13% and extended the subsidies on EV batteries for one more year. This will boost the Indian EV market. PSR
Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research
