Union Finance Minister, Nirmala Sitharaman recently announced a handholding support for the MSME sector in the budget 2020.
Auto components being one of the MSME driven segments, this would enable auto component
manufacturers to expand their business and grab export opportunities.
For any economy to prosper, the manufacturing
sector should reflect growth. Irrespective of country’s huge domestic
consumption, manufacturers shall also foray and explore various export markets. These markets will offer great help when domestic demand falls, alike the current situation.
Deepak Jain, President, ACMA, said, “The three levers of Aspirational
India, Economic Development and a Caring Society enshrined in the budget will
be the bedrock to propel us further.”
“We are glad that the Government has
announced a Rs 1,000 crore handholding scheme for mid-sized companies including
those in the auto components to give a thrust to export development, R&D
and technology upgradation. The scheme will help the component sector remain
relevant and competitive. This has also been a long-standing request of ACMA.” added
He further mentioned “Being
significantly dominated by MSMEs, enabling measures to extend invoice financing
to MSMEs and creating access to working capital through a new scheme are a
welcome step. That apart, enhancing the turnover threshold for audit of MSMEs
from Rs 1 to Rs 5 crore will facilitate ease of doing business.”
Measures adopted by the government to
strengthen checks on imports due to FTA, review of rules of origin, enhancing
safeguard duties and invoking quality control order on import sensitive items
will encourage ‘Make in India’.
Focus on electronics manufacturing including
electronic equipment and semiconductor packaging is welcome and will encourage
manufacturing of auto-electronics and components of electric vehicles.
That apart, increase in import duty of CBUs – CVs, commercial EVs, SKD rate on
electric vehicles and CKD rate of electric vehicles will encourage
“We are happy that the process of GST continues to be streamlined and
made effective, it is critical that the GST rate on all auto components be a
uniform 18 per cent. Currently 60 per cent of auto components attract 18 per
cent while the rest are at 28 per cent. Being an intermediary industry,
reduction in rate will be revenue neutral. It will also help curb grey
operations in the auto components after market.” added, Jain.
Infra & agri boost for long run
It has to be noted here that Government has
aligned budgetary plans to strengthen core sectors like agriculture and
infrastructure. That being said, growth in these sectors will follow with more
demand for commercial vehicle and improved standard of living will improve
other vehicle segments. Government has also promised to consider development of
logistics which is elementary for consistent and successful commercial vehicle business.
Hitting similar notes, Vipin Sondhi, MD & CEO, Ashok Leyland, said, “The
budget overall covers a wide spectrum of areas such as health, skill,
infrastructure, agriculture – as a boost to the economy. The allocation of Rs
2.83 lakh crore for agriculture, irrigation and rural development will assist the
rural economy and will be good for the CV industry in the long run.”
“Further push to infrastructure of Rs.100
lakh crore over the next 5 years, including increased allocation of funds for
roads and highways and the proposal to develop five new smart cities in
collaboration with states in PPP mode, will bring positive sentiments for the
commercial vehicle sector by increasing demand,” lauded Sondhi.
“Overall economic activity and job creation
will increase demand for goods and consumption and increase freight movement on
trucks,” pointed out Sondhi.
This budget also targeted at encouraging industries to invest in their
businesses. Kadam said, “With the Union Budget 2020, the government proved that
it is committed to revitalise consumer spending.”
The government’s proposal on skill development will ensure job opportunities
and Schaeffler India are also aligned with the same thought process, believed