With over 15 million sales in 2021 alone, the two-wheeler market has undeniably taken the wheels of the automobile industry. But like all other sectors, the two-wheeler industry has been hit hard by the pandemic, with sales dipping to historically low numbers.
Amidst all this, the Union Budget 2022 brings a ray of hope for everyone, including the two-wheeler sector. The industry is looking forward to many remedial measures to tackle internal odds and external factors.
Here are some of the key expectations for the two-wheeler budget 2022.
The apex body of Indian automobile retailers – the Federation of Automobile Dealers Association (FADA), has asked the finance ministry to reduce the GST rate from 28% to 18%, which will allow the two-wheeler sector to return to the growth path.
The reason behind this request is that two-wheeler is no longer a luxury but a means of transportation for many lower-class and rural families. So, categorising two-wheelers under luxury/sin products, which are taxed at 28% + 2% cess, does no longer make sense.
By bringing down the GST to 18%, the government can help retailers boost demand and improve sales and revenue.
Increase disposable income
Many two-wheeler manufacturers have urged the centre to allow for more disposable income to help improve sales. Since most of the two-wheeler customers have a monthly salary of less than Rs. 50,000, measures to increase disposable income will bolster confidence among this chunk of the population. It can help improve the demand for two-wheelers.
Offer priority lending for EVs
As per a report by NITI Ayog, lending institutions have the potential to create a Rs. 40,000 crore EV financing market by 2025. With such enormous potential, granting priority lending status to two-wheeler loanand EV financing can pave the way to realise this vision.
Plus, the RBI’s priority lending mandate has a phenomenal track record of boosting credit demand towards areas of national priority. With all this in place, citizens will be able to afford EVs at interest rates, leading to greater demand, sales, and revenue.
Setting up EV infrastructure
Many automobile manufacturers are also expecting the Union Budget 2022 to address the development of EV infrastructure, in particular, the charging stations.
The demand for EVs is expected to witness exponential growth in the coming years. Hence, there is a tremendous requirement to ensure EV charging infrastructure is set up in all upcoming and existing commercial establishments and housing projects.
In a nutshell, two-wheeler industry expectations for this year lean heavily on the taxation, lending, and EV infrastructure areas. Getting respite in even some of these can help the two-wheeler industry bounce back to its former pre-pandemic glory.
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