Auto makers fell across the board at 14:50 IST on BSE as investors digested budget proposals for the automobile sector.
Escorts (down 4.03%), Mahindra & Mahindra (down 3.71%), Hero MotoCorp (down 2.46%), Ashok Leyland (down 2.28%), Tata Motors (down 1.36%), Bajaj Auto (down 1.21%), Maruti Suzuki India (down 1.17%), TVS Motor Company (down 0.31%) and Eicher Motors (down 0.23%), edged lower.
The S&P BSE Sensex was down down 319.56 points, or 0.80% at 39,588.50.
Finance minister said that since crude prices have softened from their highs, it gives a room to review excise duty and cess on petrol and diesel. She proposed to increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel.
The government has allocated Rs 10,000 crore to the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme on 1 April 2019 for faster adoption of electric vehicles and has announced upfront incentives for electric vehicles.
Phase-II of FAME Scheme, following approval of the Cabinet with an outlay of 10,000 crore for a period of 3 years, has commenced from 1 April 2019. The main objective of the Scheme is to encourage faster adoption of Electric vehicles by way of offering upfront incentive on purchase of Electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles. Only advanced battery and registered e-vehicles will be incentivized under the Scheme with greater emphasis on providing affordable & environment friendly public transportation options for the common man.
Considering India's large consumer base, the government aims to leapfrog and envision India as a global hub of manufacturing of Electric Vehicles. Inclusion of Solar storage batteries and charging infrastructure in the above scheme will boost the government's efforts. The government has already moved GST council to lower the GST rate on electric vehicles from 12% to 5%. Also to make electric vehicle affordable to consumers, the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.
Auto makers have voiced their displeasure about selling electric vehicles in such a short time frame, saying that such a programme would derail growth for the domestic auto industry which is already tackling challenges of BS VI, safety mandates and slowdown.
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