Expectations for the EU budget for 2024: Further increase in spending on road infrastructure, development of policies promoting electrification

The growth of the automotive industry in India has been due to the excellent road infrastructure that has been built in the last few years. A lot of intercity travel means that consumers want luxury cars, they want safer cars, and this has helped drive growth in the industry.

This time, we would expect from the EU budget not only continuity of infrastructure spending, but also an increase in spending on road infrastructure, because this sector has a lot of room for improvement to develop.

One of the key factors that will help us make electrification of cars a success in the long term is the reduced duty structure that allows EVs to be priced at par with ICEs. We expect the government to come out with a clear policy roadmap and make a statement that these tax incentives will be in place for the next 8 to 10 years.

This will give the customers the confidence to go into EV and also OEMs to invest more in electrification. OEMs like us would be interested in introducing new cars in the Indian market. Also, there is an urgent need for state governments to continue their commitment to EV adoption by continuing tax breaks and incentives that attract end consumers.

For charging infrastructure, the responsibility falls on charging point operators (CPOs), who must configure the desired network to democratize their chargers. Currently, it appears that many CPOs do not provide their APIs, so customers must download multiple apps to charge their cars.

To overcome this, the government can create a common platform for all CPOs to register themselves, so that customers will have the ease of payment like UPI to make transactions when it comes to charging their EVs. Apart from this, there are many good ideas across the world to make it free for EVs by providing dedicated parking spaces in cities for EVs. So I think no amount of incentives is less because electrification needs a big push from the government.

As India aggressively moves towards carbon neutrality, the role of the government is also becoming more visible. We believe that the path to a carbon neutral ecosystem will start with zero emissions, which can be achieved through electrification. OEMs, their suppliers, vendors, policymakers and all other key stakeholders need to come together, work closely together to ensure that we create a robust, resilient and time-bound EV ecosystem.

At the OEM level, the industry is ensuring that we are actively encouraging EV adoption not only by introducing technologically advanced and desirable product offerings, but also by focusing on mitigating the total cost of ownership. OEMs are doing this by offering long battery warranties, attractive residual values ​​for EVs that are comparable to ICE vehicles, and extending service intervals to extend garage visits.

The industry should continue to focus not only on introducing new products, but also devote time and resources to improving consumer education initiatives in the markets. A real acceleration in EV adoption can only happen if there is a strong consumer demand for these technologies; but to do so, we need a coordinated and coordinated effort from OEMs, policymakers and customers.

In terms of import duties, we have been in India for 30 years and have been doing business based on the current tax structure. While lower taxes are always welcome, we also have to be pragmatic given the current economic and political compulsions. So we are realistic about the tax burden. Hopefully, there will be no hike in this Union Budget and there will be continuity in taxation, which should help us do business as usual.

We expect the Indian auto industry to grow 7% to 8% this year or at most 10%. The luxury car market is 1% to 1.2% of the industry and this segment should grow in double digits, maybe a little faster than the passenger car market because the base is low.

Right now, if we look at the favorable factors; the stock market is at an all-time high, the real estate sector is doing well, tax revenues are at an all-time high. So we don’t see any obstacles to achieving the projected growth. With the upcoming holiday season coupled with the wedding season and the depreciation month in September (many consumers buy cars in September to take advantage of the depreciation relief), I think the market will remain strong for the rest of the year as well.

(Santosh IyerIsManaging Director and CEO, Mercedes-Benz India. As told to Lalatendu Mishra)