Will The Union Budget 2022 Boost The Automobile Sector?

MotoGazer Union Budget 2022 Automobile Industry
Will The Union Budget 2022 Boost The Automobile Sector
News: Union Budget 2022: What’s in it for the automotive sector

The Union Budget for FY 2022-23 was announced today by the Hon. Finance Minister Nirmala Sitharaman. With a focus to boost the Indian automobile industry, particularly the Electric Vehicle ecosystem.

The budget comprised of Battery Swapping Policy to boost the electric vehicle acquisition, starting defense Research & Development for private manufactures of auto component.

The government also declared an MSP of ₹2.73 lakh crore. In addition to other benefits to aid the farming sector. Eventually resulting in the demand for automobiles being increased in rural markets.

Union Budget 2022 for Indian Automobile Industry Highlights:-
Battery Swapping Policy

Based on the effective implementation of this policy, the ecosystem for Electric Vehicles shall benefit the Indian Automobile sector. The automobile manufacturers and Electric Vehicle charging infra companies shall benefit from this policy. Implementation of this policy shall accelerate the electrification of fleets for both passenger vehicles & goods vehicles.

Moreover, through this policy, the government will encourage private infra companies to participate in the process of building the battery-swapping stations & technology.
The benefit of this policy shall be limited to a few private companies only. Unlikely any major change in the Indian electric mobility domain that could boost the sector.

Industry Experts Take on the Battery Swapping policy

Further, Sameer Aggarwal, CEO and Founder, of Electric Vehicle finance firm RevFin stated the policy shall support in the wide-scale implementation of batteries as a service, reducing direct ownership costs of electric vehicles.

Similarly, Rajat Verma, CEO and Co-Founder of li-ion battery manufacturer Lohum stated this policy boosts towards achieving net-zero goals. Samrath Kochar, CEO and Founder of Li-ion battery manufacturer Trontek stated the budget will boost domestic battery production and support the development of local capabilities.

EVs in public transport

Moreover, the Finance Minister added that the government will promote cleantech and electric vehicles for the public transport sector.
Resulting in boosting the automobile manufacturers of electric buses and commercial vehicles. Further benefitting the respective companies in the supply chain of EV’s. Though the said policy shall benefit only a few manufacturers but not the entire automotive sector.

No Additional Price Boost for Automobile Manufacturers

While the Finance Minister announced to boost the automobile industry at large in India. The automotive industry demands remained unchanged, such as incentivizing the purchase of a new electric vehicle, tax reduction and revised duty slab.

Moreover, there was no announcement to boost the automobile industry to control the rising input costs. Resulting in no change in the price of new vehicle purchases.

Starting defense Research & Development for private companies

Starting a Defense Research & Development for private companies shall initiate a new growth segment for automobile component manufacturers in India.
Automobile manufacturers like Tata Motors & Mahindra who have also manufacturers for the Indian armed forces are already implementing the defense R&D sector through their respective plants. Starting the defense R&D for private manufacturers shall support the new revenue and growth. Limited to a few manufacturers only.

₹2.73 lakh crore MSP  to boost rural Automobile demand

A ₹2.73 lakh crore MSP payment added to the other benefits to aid the farming sector. Moreover, it shall result in improved demand for vehicles in the rural sector which contributes largely to the sales of 2-wheelers, entry-level cars and SUVs in addition to the small commercial vehicles & tractors. The second wave of the pandemic had hit the rural economy badly & through this announcement, there could be some scope of revival.

₹20k crore to boost infrastructure projects

Further, the Finance Minister allocated ₹20,000cr towards infrastructure projects.
Moreover, this announcement shall boost the demand for commercial vehicles. Considering the fact of new projects create demand for new commercial vehicles. Additionally, the finance minister mentioned expansion of the national highways which may result in scope of revival for Commercial Vehicles demand.


The Union Budget was an average budget for the automobile sector considering few demands being considered & few missed.


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