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​Budget 2017: What should the Commercial Vehicle Industry Expect?

Published On Jan 27, 2017By Mukul Yudhveer Singh

Dave Ramsey once said, “A budget is telling your money where to go instead of wondering where it went.” It, indeed, is nothing but forecasting the calculations pertaining to expenditures one will make in the near future. The saying by Dave Ramsey applies both to an institution and to an individual, equally. And for a country as big as India, the practice becomes really critical. After all, we are, but a nation with more than 1.25 billion fellow Indians living together, and analysing how the taxes we pay are spent by the government really becomes crucial.

Though the budget covers almost all aspects requiring financial planning for the next year, the years prior to 2014 saw less emphasis given to the auto industry in India, especially the commercial vehicle segment. This segment comprising of trucks, buses and all other varieties of commercial vehicles in the country, is majorly responsible for transporting food, clothing and many other raw materials. It would not be wrong to put India’s transportation industry as a key element contributing towards the rise and decline in inflation rates. Costlier the freight rates, more expensive the food and other materials, says simple math.

Auto budget is so important to fleet owners, OEMs, individual truck and bus owners that most of them undertake and finalise business plans only after analysing the final budget. The current year is also pivotal, as big policies like mandatory AC and BS-IV implementation are going to make truck and bus buying expensive in the country. Though experts believe GST implementation will relieve individual transporters and transportation agencies of some burden, it, still, is too early to predict and comment on the same. Here is a list of expectations the trucking fraternity in India, is looking forward to.

A Cut in Taxes

The Government of India, has already made its intentions clear on doing away with old commercial vehicles in the country. Many studies have accused old heavy vehicles to be the major pollution contributors and fuel gulpers. There is absolutely no way of rebelling against the decision, as it has been taken for good of the country only, but what about individual truck owners who may not be able to buy new trucks?

Our authorities can help such old vehicle owners by providing them a rebate in taxes including the excise duties. Moreover, as the new BS-IV trucks with mandatory AC will be expensive, a cut in taxes will definitely boost the morale of truck and other commercial vehicle owners, and encourage them to work for India’s betterment. People usually end up paying one to two lakhs in taxes on heavy trucks alone.

Dedicated Freight Highways and Corridors

We all know how commercial vehicle drivers operating trucks and pickups are treated in the country. Most of the states and cities in India don’t allow commercial vehicles to enter the roads during specific times. Such instances force these drivers to operate during nights, leaving a deep impact on their health, leave alone increased chances of accidents.

Increased number of dedicated freight highways and corridors will not only help the transport community in India, but also help in decongesting roads located inside cities. The accident instances may also witness a sharp decline.

Interest Rates

Unlike private car owners and automobile enthusiasts, commercial vehicle owners buy trucks and buses as a means of livelihood. Their vehicles act as bread and butter winners for their families. Lowering the interest rates charged with loans on commercial vehicles, will be of great help to individual truck owners and other commercial vehicle owners in India.

Not only will such people have some relaxation from the financial problems incurred due to mandatory AC and BS-IV emission norms, but the decision may also help in implementing government’s decision of old truck scrapping policy. The current interest rates start from 10 percent per annum and go upto 20-25 percent depending on one’s credit score.

Subsidy on Electric and Hybrid Trucks and Buses

A lot of commercial vehicle manufacturers have unveiled and showcased new trucks and buses based on Hybrid and Electric drive power trains. In fact, Tata Motors has showcased India’s first Hydrogen Fuel Cell powered bus just before the commencement of current Budget sessions. It is a fact that such vehicles will help curb pollution on one hand, and cut India’s dependency on fossil fuels on the other. But high acquisition costs for commercial vehicles based on Hybrid, Electric and Fuel Cell technology may just put these beyond people’s reach.

If the Government of India decides to offer handsome subsidies for individuals, STUs and agencies looking forward to buy such trucks and buses, then the decision will only help in controlling carbon emissions as well as deducing country’s dependency on fossil fuels. Please note that most of such vehicles cost nothing less than a crore and a half in INR.

GST Implementation

Experts around the country believe that the Goods and Service Tax (GST) will be implemented this financial year onwards. The bill has received mixed emotions, and is due to come into effect from July 1, 2017. It is expected that the move will help rationalize the existing tax structure across India. But, keeping hopes high, without any real time analysis, is simply beating around the bush. Many fleet owners, OEMs are actually waiting for the after effects of GST implementation before making any major announcement.

The trucks and buses community in India will definitely like to see special privileges given to them as the country is currently undergoing drastic changes. Old truck scrapping, mandatory AC, BS-IV implementation are only going to make things worse in terms of expenses, and transporters in India will surely have their eyes along with their hopes placed firmly on GST implementation.

Conclusion

Different bodies constituting the transport industry in India are indeed imperative parts of the country. A lot of things, including inflation rates prevailing in the country are directly proportional to Indian transport industry. Taking such bodies into consideration while finalising the eventual budget copy can prove to be a sure shot way of achieving a better GDP.

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