Storage Battery: Budget 2013-14 Analysis
Budget provision
- The following announcements have been proposed in the Union budget 2013-14:
- Excise duty on SUV increased to 30 per cent from 27 per cent earlier. SUVs occupy greater road and parking space and ought to bear a higher tax.
- Import Duty on Imported Cars to Increase From 75 per cent to 100 per cent.
- Excise on small cars, sedan remains unchanged. Also, no diesel car surcharge on hatch and sedan segment.
- Proposal to allocate Rs 14,873 crore to Jawaharlal Nehru National Urban Renewal Mission.
- Proposal to purchase 10,000 buses under Jawaharlal Nehru National Urban Renewal Mission (JNURM).
- Financial Year 2013-14 expenditure plan will be 30 per cent higher than FY 2012-13 with total expenditure to be Rs 5.5 lakh crore. Focus on Infrastructure, Agriculture and Road Projects.
- Setting up of a regulatory authority for roads, target of 3000 km of project award in first half of FY14.
- Encouraging Infrastructure Debt funds would provide a scheme for takeout financing, credit enhancement by IIFCL.
- Tax-free bonds up to Rs 50,000 crore will be allowed in the new financial year.
- Plan allocation for general education has been increased by 17 per cent to Rs 65,867cr for FY2013-14 from Rs 56,200 cr in FY2012-13.
- Under Sarva Shiksha Abiyan, Rs 27,258 crore has been allocated, which is 7 per cent higher than that allocated in the FY2012-13 budget.
- Initiatives to modernise the Postal network are currently ongoing at an overall cost of Rs 4,909 crore. An additional outlay of Rs 532 crore has been provided to make post offices part of the Core Banking Solution and offer real time banking services.
- Proposal to provide an additional deduction of interest of up to Rs 100,000 on housing loans of up to Rs 25 lakh for the first time buyers in addition to the current exemption of Rs 150,000.
- Investment allowance of 15 per cent for investments above Rs 100 cr as a tax incentive.
- Full exemption from basic customs duty and SAD and concessional CVD at 5 per cent (by way of a central excise duty exemption) is being extended to specified parts of the hybrid vehicles. The concession is subject to actual user condition and will be available till 31.03.2015.
- Extension of basic customs duty is exemption on lithium ion automotive battery for manufacture of lithium ion battery packs for supply to the manufacturers of hybrid and electric vehicles till 31.03.2015.
Budget Impact
- Excise duty on SUVs intended for non-taxi use increased to 30 per cent from the current rate of 27 per cent is negative as higher excise duty will be passed on to the customers which may impact demand from SUV segment.
- Financial Year 2013-14 expenditure plan will be 30 per cent higher than FY 2012-13 with total expenditure to be Rs 5.5 lakh crore. Focus on Infrastructure and Road Projects in Rural India is one positive factor for the OEMs industry though.
- Proposed sanction of Rs 14,983 crore under JNNURM Scheme and plans to purchase 10000 busses is positive for the industry as it will revive demand from HCV.
- Government continued thrust on e-Governance of post office network and higher educational by increasing allocation goes well to IT and education sector and will ultimately positive for the industry.
- An extension of another two years period of exemption for certain specified parts of electric and hybrid vehicles and full exemption from customs duty to lithium ion automotive battery are positive developments for the storage battery industry.
Stocks to be watch
Exide Industry, Amara raja
Outlook
Storage battery industry demand growth linked-up with growth in automobile industry which saw sluggish growth due to economic slowdown.
Interest rates, fuel pricing, infrastructure and agriculture spending would be decisive factors for the automobile sector to emerge out of the current slump in the short term.
On positive side, extension of period of concession available for specified parts of electric/hybrid vehicles and full exemption from customs duty to lithium ion automotive battery up to March 31, 2015 to encouraging the use of electric vehicles are positive developments for the storage battery industry as the Government’s thrust on promoting green vehicles.
Meanwhile government thrust to improve the literacy level in the country by higher budgetary allocation on education and modernisation of the postal network will also be augur for the industry.