Cut GST before festival season: Carmakers to government : 03-09-2019

Auto industry body Society of Indian Automobile Manufacturers (Siam) on Monday sought immediate steps from the government, including reduction in GST rates and initiation of scrappage policy, as sales continued to fall with passenger vehicle makers witnessing a decline of 30% offtake in August.

Siam said even commercial vehicle and two-wheeler sales are significantly negative, indicating that the market has still not responded to the various steps initiated by the finance minister Nirmala Sitharaman last month

“All this while, the industry has pulled out all the stops in offering attractive deals and discounts to the consumers. However, the ability of the industry to provide large discounts is limited and this only highlights the need for the government to consider reducing the GST rates from 28% to 18%, which would significantly reduce the cost of vehicles and, in turn, create demand,” Siam president Rajan Wadhera said in a statement.

There is also an urgent need to come out with an integrated incentive-based scrappage policy covering all segments of the automobile industry as promised by the FM, he added.

“The festival season is around the corner, it is imperative that these decisions are taken quickly and announced without delay so that the industry could hope for a better festival season that could harbinger a recovery in the industry,” Wadhera said.

The series of announcements on credit availability and reducing the cost of credit that were made do not seem to have percolated down to the non-banking financial companies (NBFCs) which support the bulk of finance for the automotive industry, he added. The consumer sentiment also continues to be low and there is clearly a trust deficit in lending money to the dealers, he added.

On Sunday, major companies such as Maruti Suzuki India, Hyundai, M&M, Tata Motors and Honda reported a high double-digit degrowth in their sales in August.

Source : Times Of India