Minister of Heavy Industries and Public Enterprises Prakash Javadekar said the government is examining the automobile industry’s recommendation for a reduction in GST rates by 10% across all categories of vehicles and a decision will be arrived at in some time.
Javadekar who was speaking at the 60th Annual Convention of industry body Society of Indian Automobile Manufacturers (SIAM) said he will discuss the industry’s suggestion for a temporary reduction in GST with the Prime Minister and the Finance Minister. “Details of the proposal are being worked out by the FM. For two-wheelers, three-wheelers, public transport and then four-wheelers…in that order relief should come. Hope you will get good news very soon.”
Javadekar also added that the government has received all inputs from stakeholders and is ready with an incentive-based vehicle scrappage policy and an announcement will be made ‘very soon’.
The auto industry is rooting for a reduction in GST rates, timely introduction of the vehicle scrappage policy to revive demand post the outbreak of the coronavirus pandemic. Vehicle sales in the local market have declined 75% to 1.49 million units in Q1FY21.
Union Ministers Nitin Gadkari and Piyush Goyal are set to speak at the event later in the day Friday.
SIAM president Rajan Wadhera said the industry would need a ‘real hard step’ to improve demand and they desperately need the government to step in with incentives as soon as possible, then only the Indian market will be regain its previous peak of FY-19 by FY-24, underlining how the economic slow down coupled with pandemic Covid-19 had dealt a body blow on the Indian automotive industry
The industry association also pleaded to the government on deferring some of the critical regulations on Corporate Average Fuel Economy Norms or CAFE, RDE regulation (Real Driving Emission testing) and forthcoming safety regulations as they would further add to the cost and hurt sentiment.
Wadhera said, the Indian passenger vehicle and two wheeler makers have already come on par with European standards in terms of emission with the BS VI and also in terms of safety any more regulations will further lead to cost pressure post pandemic.
“We should not have an overdose of regulation which will add to the vehicle cost and hurt affordability of the consumers,” added Wadhera.
The average sales in the first five months of FY-21 is at almost 50% of the previous year, so there is a significant pent up demand in the market and with the push on personal mobility which is increasingly turning from a ‘luxury into a necessity’ in the Indian market, addressing supply chain bottlenecks will be very critical ahead of the government support, reckoned experts.
Uday Kotak, MD & CEO of Kotak Mahindra Bank who is also the president of CII said bankers are ready, willing and eager to extend loans to the prospective buyers and he urged the automakers to get the supply chain resolved.
“There has been a very sharp reduction in interest rates post Covid, availability of funds is not an issue. Banks are ready to lend for two wheelers, cars or trucks, wherever there is a demand. With the government taking steps, there may be a sharp increase in demand, the auto industry should insure that there are no supply chain issues,” asserted Kotak.
Source : Financial Express