Expectations of the auto industry
Ahead of the Union Budget 2023 presentation on February 1, Finance Minister Nirmala Sitharaman has been holding pre-budget consultations with various industry bodies, including the automobile industry, which is looking for a growth-oriented budget.
The upcoming Budget will hold great significance for the Indian auto industry, especially for the electric vehicle (EV) segment. As the Indian government braces against climate change, the Indian automobile market witnessed exponential growth in overall EV sales.
Union Finance Minister, Nirmala Sitaraman, will be presenting the 2023 Budget on February 1
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Challenges for domestic auto industry
The domestic automotive industry has seen a healthy revival in the current fiscal aided by a recovery in economic activities and increased mobility—expected to grow at high single-digit levels across segments in FY24. The demand sentiments for a majority of the automotive segments, including passenger vehicles, two-wheelers, and tractors, remained healthy in FY23.
As per a report by domestic credit ratings agency ICRA, category-wise, passenger and commercial vehicle volumes could see a growth of 6-9% and 7-10%, respectively, while two-wheelers and tractors are estimated to grow at 6-9% and 4-6%, respectively, in the financial year starting April 2023.
However, the report added that the two-wheeler industry continues to struggle with industry volumes still below the pre-COVID peak levels. Although the recent festive and marriage season provided optimism for improved off-take, a sustained recovery in demand sentiments is yet to be seen.
Production of automobiles were impacted by the outbreak of Covid-19 and the global semiconductor shortage
Further, ICRA said that the entry-level car segment witnessed a weak off-take due to a decline in the purchasing power of consumers at the bottom end of the pyramid. This is a result of a significant rise in vehicle
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