Prashanth Doreswamy,
President and CEO,
Continental India
The automotive sector in India is currently at the cusp of a massive transformation in terms of technology, self-reliance and sustainable future. Continental is both optimistic and hopeful that the Union Budget 2025 will lay the groundwork for a more effective, advanced, and environmentally accountable automotive ecosystem.
Key Expectations
A simplified classification and GST rate structure for automobiles and auto components.
One of the most significant issues in the auto sector is the complexity and inconsistency in the classification of auto parts, components and finished vehicles under the HSN codes. A simplified nomenclature will further facilitate the ease of doing business.
It would help in eliminating confusion and improve compliance, thereby reducing unnecessary litigation around classification.
Reduction of GST on hybrid vehicles
With the growing demand for greener, emission-friendly powertrains among the customers, a sustained focus on green mobility with cuts in GST for hybrid technologies is key. Hybrid vehicles in India are currently burdened with the highest rate of tax of 28%, making them less attractive than fully electric or conventional petrol/diesel vehicles. Hybrid Technology is always considered as a bridging tech, before we effectively move to EVs. This is additionally helpful while EV charging infrastructure develops.
Incentives to promote R&D, innovation in Automotive electronics and encouraging start-ups.
Incentives to promote R&D and innovation in capital-intensive Automotive electronics hardware sector. Government could consider additional income tax reduction for Indian corporates spending over 3 per cent of their turnover to advance R&D and filing patents/designs in India. Well-calibrated incentive system designed to empower industry players could motivate companies to invest in the R&D value chain in cutting-edge technology domains like AI, IoT, and embedded technologies in automotive electronics sector. We also need to support start-ups in this space. These steps will guarantee that India stays competitive in the global automotive landscape.
Overall policy landscape
A strong focus on aligning policies to improve the manufacturing capability while also taking care of the existing challenges to catalyze growth in this sector – like correcting the inverted duty structures in automotive, tax benefits for EV investments, more allocation in PLI schemes for automotive, more investments in charging infrastructure. In addition to promoting domestic manufacturing this will also aid FDI inflow.
To accelerate India’s journey towards becoming a global hub for automotive technology, we must have a conducive policy environment while addressing pressing sustainability challenges and elevating road safety standards.
We are eager to support the Indian government in this shared vision for mobility. Together, we can create a safer, more efficient, and environmentally responsible future of mobility.”
