In the 2020 Budget session Government has announced handholding support to the auto component industry for technological upgradation, R&D support and strategy planning.
The government has announced Rs. 1,000 crore handholding scheme for mid-sized auto component makers.
Auto industry customarily has been coming up with same demands ahead of every budget session. Reduction in GST rates on automobiles and auto components and scrappage policy among others have been the standard demands. While these demands seem far from government’s purview, it has been giving some benefits. Even in 2020 Budget it has announced handholding support to the auto component industry for technological upgradation, R&D support and business strategy planning. The government has announced ₹ 1,000 crore handholding scheme for mid-sized companies including those in the Auto Components.
Speaking about the move, Deepak Jain, President ACMA, said, “We are glad that the Government has announced a ₹ 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. 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 Rupees One Crore to Rupees Five crore will facilitate ‘ease of doing business.”
Finance Minister, Nirmala Sitharaman has also announced other benefits that will help boost demand of the industries. For starters, reduction of 5 per cent in income tax bracket of up to ₹ 15 lakh from respective rates will generate more disposable income, an estimated benefit of ₹ 40,000 crore while will help increase demand. The government will also invest ₹ 1.7 lakh in transport infrastructure and will build 2,000 km of strategic highways which will lead to an increased demand of commercial vehicles. Moreover, increase in rural spending and construction will also give a filip to the sales of entry level motorcycles.