Union Budget 2022: Key Highlights For The Auto Industry

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Although Budget 2022 did not offer much relief to the automobile sector, it did draw attention to a few other fields that could encourage automakers in different fields.




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The Union Budget 2022 was today presented by Finance Minister Nirmala Sitharaman at the Parliament.

The Union Budget 2022 was today presented by Finance Minister Nirmala Sitharaman at the Parliament that includes major announcements for the automobile industry, which would impact the sector, directly or indirectly. Although the budget did not offer much relief to the automobile sector, it did draw attention to a few other fields that could encourage automakers in different fields. These would include the new battery swapping policy, electric vehicles for public transport, and opening defense R&D to private players for the development of auto components. Let’s take a quick glance, shall we?

Also Read: Union Budget 2022: Additonal Excise Duty Of ₹ 2 Proposed On Unblended Fuel

New Battery Swapping Policy

This was probably the biggest announcement made by the Finance Minister, as a new battery swapping policy will soon be introduced in the country, benefitting the whole EV ecosystem. The move will allow the major EV players, OEMs, and charging infra companies to set up battery-swapping stations and technology in the country, and in the process, allowing for a shift towards electric-powered vehicles from the ICE-powered vehicles.

Electric Vehicles For Public Transport

The Finance Minister also announced the implementation of clean & electric vehicles in the commercial vehicle sector. The move will help auto companies to produce and manufacture electric buses and electric commercial vehicles for public transport, thus reducing the toll on fossil-fuel-generated vehicles. Moreover, public transport running on battery-powered vehicles will certainly benefit from a lower cost of running, as well as see a drop in emissions.

Also Read: Union Budget 2022: National Highways Network To Be Expanded By 25,000km In 2022-23

Opening R&D defense to private auto component makers

This is probably another big announcement made earlier today, as now, private automakers can make bids for supplying auto components to our defense arsenal. This move could provide auto component players with a new revenue and growth area. However, to date, carmakers such as Tata Motors and Mahindra have successfully delivered products to the armed forces.

Expansion of National Highways

Another key announcement made by the Finance Minister was the allocation of ₹ 20,000 crore in infrastructure projects, movement of people, and goods. This will also contribute to expanding the National Highways network by 25,000 km in 2022-23, with a view to improving the conditions of roads in our country, resulting in improved productivity and better fuel efficiency. Effectively, upgraded roads will also positively impact the preservation of vehicles, thereby reducing the repair costs.

Also Read: Union Budget 2022: Finance Minister Proposes Battery Swapping Policy For EVs

Create Demand For New Vehicles In CV Space

Providing a major boost to the commercial vehicle segment, Budget 2022 also announced an allocation of ₹ 20,000 crore for infrastructure projects, creating a demand for new CVs. The investment will help the CV sector, especially at a time when the sector has been hit hard by the pandemic.

MSP payments to increase vehicle demand

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The Budget 2022 also mentioned a Minimum support price or MSP payment of ₹ 2.73 lakh crore along with other benefits to aid the farming sector, which could possibly improve the demand for vehicles in rural India. It is expected that the announcement could improve the response of rural regions, as it comprises a major chunk of sales from vehicle makers in the two-wheeler and entry-level cars segment.

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