Here's a list of sops that FM may announce for auto sector in Budget 2022

NEW DELHI: Auto and auto ancillary sector, which has been struggling to recover fully from Covid waves, increase in cost of ownership, weak rural demand and chip shortages, is eyeing a handful of sops and certain measures aimed at bolstering consumption in the forthcoming Budget.

Prabhudas Lilladher sees rationalisation of the tax and duty structure such as 18 per cent GST on all the auto components to minimise spurious and counterfeit products in aftermarket.

At present, GST on some auto parts stands at 28 per cent. The brokerage sees execution of scrappage policy and infrastructure spending, which could drive commercial vehicle (CV) demand. Besides, it sees increasing RoDTEP (Remission of Duties and Taxes on Export Products) benefits from the current 1 per cent.

"This will aid in exports," it said, adding that any measures to boost consumption by lifting the rural economy will aid two-wheeler segment recovery.

Nirmal Bang Institutional Equities too is expecting reduced and uniform GST rates on auto components to make manufacturers more competitive in the exports markets.

It is expecting a reduction in GST rates to make costs more competitive amid sharp rise in vehicle prices over the last two years. Like Prabhudas Lilladher, this brokerage sees reconsideration and upward revision of RoDTEP rates to enhance competitiveness of Indian players, Also, certain benefits aimed at accelerating adoption of EVs in India are likely, it said.

JM Financial said additional incentives beyond current PLI to increase domestic manufacturing of components and higher auto exports from India are likely. It sees incentives for Hydrogen and fuel cell development.

If announced, "it would likely increase exports of auto components from India and help promote component localisation and better business prospects for auto ancillary players." Any such announcement should benefit export companies such as TVS Motor, Bajaj, Bharat Forge, JM Financial said.