The Union Budget 2024-25 is an amalgamation of big-ticket announcements, some surprises and inclusive allocations. The granularity in the GDP projections considered for FY25 will have to be seen but the projections are bold. For India to become a formidable economic powerhouse and a developed economy by 2047, the Union Budget does address some short-term needs while keeping an eye on the long term.
India aspires to become a global base for manufacturing, R&D, Information Technology and E-Commerce and these industries require high levels of skill and knowledge. Government of India’s announcement about skilling 20 lakh youth over the next five years, opening internship opportunities for one crore youth in top 500 companies and upgrading facilities at 1000 ITIs are all welcome steps to boost capability so that the younger generation is equipped to win jobs in the manufacturing sector.
Historically, Indian industries had clustered in pockets, in some states, which resulted in GDP of those states increasing over the years, not to mention opening the gates for employment. A conducive environment for growth is created when industry is spread across the country so that our population also starts spreading out evenly, bringing education, employment, prosperity and growth alongside, to the other states. The Purvodaya vision and the INR 1.5 lakh crore allocated to collective development of all states of India may point at faster development across the nation.
Taking careful strides in the space of renewable energy for a growing economy like ours, is vital. INR 7327 crore allocated to solar projects in FY-2024 and new allocations of INR 68,769 crore towards energy in FY-2025 and the early steps towards establishing nuclear reactors, is in the right direction. Bringing solar energy to one crore households, providing 300 units of free electricity is a welcome move towards inculcating clean energy utilization. A thought that will reap benefits in the future.
Now, coming to the Commercial Vehicles Industry, the INR 11.11 lakh crore capex towards infrastructure development is a silver lining in an otherwise challenging year. This indicates the right intent of the Government of India to boost infrastructure growth, which will give an opportunity for the CV industry and its ecosystem to produce more, sell more, bring more efficiencies in customer service and also open doors for new products and applications in the logistics, construction and mining sectors. We are particularly optimistic about infrastructure implementation that will increase demand for our miners, tippers, bulkers and tractor trailers. This augurs well if the Amritsar-Kolkata and other freight corridors covering the Eastern side of India are built durably, at a favourable pace. We will wait for specific details on how the infrastructure capex will be utilized, to be able to better gauge business prospects in this fiscal.
The allocation of INR 10 lakh crore towards urban and rural housing can be another driver of business for the CV industry. I personally see business opportunities for BharatBenz given our strength in Construction, Mining and Long Haul covering heavy-duty segments. DICV’s early investments in establishing an inhouse R&D division has done wonders to BharatBenz product development and with the substantial R&D allocation announced in the Union Budget, it will give us more room to create, develop and evaluate alternative technologies and products for the future.
The mention of the generous capex towards agriculture, focus on urban housing, rural development projects and creation of industrial parks are interesting domains to track for us and see how these expenditures are steered, utilized and what kind of business opportunities they can give us.
The Critical Minerals Mission, a long-term vision to secure adequate supply of for various sectors, including automotive, is a move in the right direction. The duty waiver on 25 critical minerals, including Lithium is a thoughtful step towards a carbon-neutral future. However, FAME was not mentioned in the Union Budget and its continuance is essential for the adoption of electric vehicles. We hope that this important subject will be appropriately addressed in the coming months.
Last but not least, the reform in Income Tax will hopefully increase consumption and of course, this could contribute greatly to the ambitious GDP forecast the industry and the world is looking forward to.
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