Union Minister of Heavy Industries and Public Enterprises, Prakash Javadekar, said on Friday that the central government is looking into the auto industry’s recommendation for a reduction in GST rates by 10% in all categories of vehicles. The announcement will be made soon, he added.
Speaking at the 60th Annual Convention of the industry body Society of Indian Automobile Manufacturers (SIAM), Javadekar said: “We are in discussions with Finance Minister Nirmala Sitharaman on GST issues.”
Commenting on the vehicle scrapping policy, the Union Minister said that the central government has received all input from stakeholders. “Announcement on scrappage policy will be made soon,” Javadekar added.
India’s automobile industry has been severely affected by the coronavirus outbreak. The pandemic had worsened demand in the industry, which was already experiencing a slowdown last year.
“The passenger vehicle segment witnessed the longest slowdown in the past two decades spanning nine quarters. Similarly, commercial vehicles faced the second longest slowdown in the past 15 years spanning five quarters,” said the SIAM president, Rajan Wadhera. The two-wheeler segment also experienced a continuous slowdown for six quarters, he added.
The reduction of the GST rate on two-wheelers, which is currently 28%, has been a request from manufacturers for a long time. Recently, Finance Minister Nirmala Sitharaman also said that the GST Council will study the proposal to reduce the GST on two-wheelers.
Seeking government support to provide some kind of demand boost, Wadhera said: “We think that whatever we’re talking about reviving demand will provide the necessary boost for consumers to turn to dealerships.”
He also mentioned that manufacturers were not in a position to invest more in implementing upcoming government regulations. “For (the implementation of) the next regulations, the investments are very high and the industry has not obtained the corresponding revenues due to the lack of consumer demand,” added Wadhera.
Therefore, the industry does not have the ability to invest more in the implementation of new regulations such as corporate average fuel efficiency (CAFE) standards starting in 2022, he noted. Wadhera also added that government support is required to pursue the goals set out in the Automotive Mission Plan 2026 (AMP 2026). There shouldn’t be an overdose of regulations, he added.
Speaking on vehicle financing, Uday Kotak, Managing Director and Chief Executive Officer of Kotak Mahindra Bank, said: “Large investments in infrastructure are required for the long-term founding of the automotive sector. SIAM must partner with the government and lead the way to the proper functioning of the Automotive Sector “.
(With inputs from agencies)
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