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Here’s a Detailed Look at How Budget Impacts the Auto Industry in 2022

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Whether you follow the financial news or not, the Union Budget is something that you surely would be keenly following. Various policies are announced each year, and interestingly, the 2022 edition of the Union Budget brought forth many favourable changes to the Indian automotive sector. Changes to the auto policies will benefit the car insurance policy and motor insurance in general as well.

What exactly are these changes and how can they impact you?

● Policy to swap batteries :

Mrs Nirmala Sitharaman, the Union Finance Minister, in her budget speech announced the battery swapping policy. She said that more and more people will now be encouraged to swap their existing batteries and convert them to EV batteries. She said that apart from the motorists, the manufacturers will also be encouraged to install and set up units where the battery swapping procedure can take place. The government will make an active effort to encourage the private players in the industry to set up these units to ensure maximum reach and conversation, gradually leading to a more eco-friendly automotive industry in the country. The move is also expected to benefit local battery manufacturers in India and boost the economy in a structured manner.

● Greater use of EVs in public transport :

The government is taking a very keen interest in making the auto industry more and more environmentally friendly. Taking a forward step towards this mission, the Finance Minister announced that the public transport system will see greater usage of EV vehicles. This is a very positive step as not only will it make the air cleaner, it will give a huge opportunity to the EV vehicle manufacturers to make strides. This is seen as a positive move as more and more Indian e-bus manufacturers can thrive, thereby lifting up the industry in the country and creating several jobs. A sure-shot way to boost the economy! With the cost of a car insurance policy going up, many people would prefer to use public transport and so, this will be helpful.

● Vehicles won't become cheaper :

In a setback and disappointment of sorts, the FM did not assure the nation about any cuts in the cost of vehicles such as cars and bikes. The industry has been struggling with high input costs over the last few years and it was expected that this budget would make the costs lower. However, with no such announcement being made, the cost of scooters, bikes and cars aren’t expected to get any cheaper in the current financial year either, proving to be a major disappointment for the manufacturers and customers.

● Access to defense research for private firms:

Private automobile companies can now have access to the much-coveted defense R&D. This is significant as the information will help many private players to increase their productivity and boost their sales, which in turn will help boost the economy of the country. The step is mainly set to boost auto-component manufacturers. Companies such as Tata Motors and Mahindra already have a presence here, with both manufacturing vehicles for the Indian Armed Forces. The broadening of the channel will further help other players too and prove to be beneficial in job creation and economic boosts.

● Boost for the rural vehicle segment:

The pandemic left a huge dent in the demand and sales components of vehicles in the rural areas of India. Two-wheelers, along with small cars and tractors, are among the most commonly sold vehicles in the villages and small towns in India. The Finance Minister, in the 2022 edition of the Union Budget, allocated a sum of INR 2.73 lakh crore for the development and boost of the rural vehicle sector. This is a very significant move and can benefit many manufacturers and buyers simultaneously. And since every car bought in the rural areas would need a car insurance policy, the motor insurance industry would gain as well.

● Boost for infrastructure-related jobs:

Mrs Sitharaman allocated a fund of INR 20K crores to boost infrastructure projects. This is all set to make a definitive impact on the Indian automotive industry, especially the commercial vehicles sector. This has been a very welcome announcement as the commercial vehicle segment took a very sharp hit during and after the pandemic. The boost of infrastructures, mainly the highways, will lead to a rise in the demand for commercial vehicles, thereby being a boon for the industry.

Conclusion

As you can clearly see from the points mentioned above, there are some very interesting changes that were made in the Union Budget this year and many positive changes are set to be seen in the auto industry. If you plan to get a new car, this may be the ideal time to do so, given the favourable conditions in the industry. Once done, get a good car insurance policy and keep your vehicle protected.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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