A report discussing some of the potential threats and strengths of electric vehicles as a new entrant in the automobile sector in Indian Market With a population of 135.26 Crore, India is a lucrative market for any and every Multi-National Company, whether a chocolate product, apparel brand or say, automobile. With a diversified age, income and occupational composition, there comes the conflict- Becoming a niche player or hitting the bottom of the Pyramid The decision is going to be tricky considering the following points: Majority of multinational companies which has succeeded in the past are Fast Moving Consumer Goods (FMCG), capitalising on Cost Leadership Model.
The success of a consumer durable is highly uncertain. Although the per-capita GDP of an Indian household has risen exponentially post-liberalization since 2000, as compared to growth in the period from 1960-2000, However, it is still fairly less as compared to the price of an electric vehicle.
Four out of thirty (around 13.33%) of the Sensex constituents are Automobile and its Components, thus well-signifying the importance of this sector in the leading stock market indices also.
These 4 companies are: Ceat B. Hindustan Motors C. Premier Auto and, D. Bajaj 4. While the ability to purchase electric automotive by the High-income class group cannot be denied, however with the same price being paid, there are chances of luxury brands being preferred due to Veblen effect. Companies producing electric vehicles are expected to get a boost in India if they produce in India, i.e. following Make in India by making India a producer hub and not just a assembly centre and utilising the cheap Indian labour and highly-skilled technical graduates.
, having a positive net increase in employment opportunities as well as export.
While the demonstration effect in India is hitting the current generation like never before, there are high chances that it might prove as a driver for growth for Electric Automobile, if backed up by sufficient income level or organised credit facilities. With greater awareness towards pollution and environment conservation, electric vehicles will be the top-priority if pollution poses an eminent danger to our nature in the coming future It may also get a boost due to the investment-linked tax incentives given by the government. As per Chapter-VI A (Deductions from total income) of Income Tax Act 1961, Section 80EEB provides that an individual who has taken a loan for purchase of an electric vehicle from any financial institution can claim the interest payable on such loan as a deduction from his gross total income. It includes the following conditions:- 1. Loan should be sanctioned during the period between 1.04.2019 and 31.03.2023.
Loan should be sanctioned by a recognized financial institution like a Bank or a specified non-banking financial institution. 3. Interest payable subject to a maximum of Rs. 1,50,000 is deductible 4. Benefit of this deduction will be available from Assessment Year 2020-21 and subsequent assessment years until loan repayment continues. With Bharat Stage Emission Standards getting updated with a stricter implementation, which was supposed to be implemented from April 20, a transition from BSIV to BSVI, Supreme Court of India passed orders for restricted sale of BSIV vehicles after the lockdown ends. In order to provide relief to taxpayers who intend to purchase new vehicle for purpose of business or profession, an enhanced depreciation rate has been introduced, with effect from 23.08.2019 vide.
Notification no. 69/2019 dated 20.09.2019 through GSR No. 679 published in the official gazette. The rates are as follows: 1. 30% for motor cars 2. 45% for motor buses/lorries Global slack in consumer demand has affected consumer activity, which eventually slumped in most of major economies in 2019, in particular automobile industry which was caused by changes in technology and emission in various countries However, around 720,000 vehicles are still unsold at various dealerships across India, thus keeping the existing automobile manufacturers in a lower hand, forcing them to go for a lower price or even a distress sale.
GST Rate structure on auto and auto parts have been debated significantly as it forms contributes significantly to GST revenue. Any change in such rate will have a commendable impact on revenue and compensation requirement. However, GST Council has currently decided not to recommend any change considering the temporary slowdown in the sector due to lack of credit, base effect, and structural changes like adoption of newer fuel standards As per use-based classification of Index of Industrial Production (IIP), the growth of capital goods and consumer durables have declined by 11.6 % and 6.5 % respectively in first three quarters of 2019-20.
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