Auto sector SOS: Need stimulus, cut in taxes as gloom deepenshttps://indianexpress.com/article/business/auto-sector-sos-need-stimulus-cut-in-taxes-as-gloom-deepens-5886848/

Auto sector SOS: Need stimulus, cut in taxes as gloom deepens

In a meeting with the Finance Minister, industry leaders drew attention to challenges, including job losses.

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The auto industry also wants the government to direct banks not to reduce lending to those segments which has the lowest NPA, such as the passenger vehicles segment.

Players from the auto sector have petitioned the government seeking assistance, including a GST reduction on vehicles, given the sharp slump in sales reported by the industry.

In a meeting with Finance Minister Nirmala Sitharaman, industry leaders, including Maruti Suzuki Chairman R C Bhargava, M&M President — Automotive Sector Rajan Wadhera, who is also president of Society of Indian Automobile Manufacturers (SIAM), along with representatives from components sector body ACMA and dealers body FADA drew attention to the challenges, including job losses, faced by the industry.

“Yes, we have asked for certain enablers for the auto industry and they have thought on it. I am very hopeful that there will be a stimulus package (for the auto industry) coming soon,” Wadhera told PTI. The government wanted to understand from the industry about reasons for the slump in demand and possible solutions to the issue, he said, adding that the heavy industries ministry was supportive.

In the meeting, he said, the auto industry broadly presented factors such as issues regarding availability and affordability of financing, increasing cost of acquisition of vehicles and change in axle load capacity for commercial vehicles that have hurt demand. He said the auto industry also reiterated that the pending notification on increase in vehicle registration fees should not happen as the sector is already reeling under stress of low demand.

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On the availability and affordability of finance, he said: “Immediate measures are needed to reduce finance cost. We told them (government) that banks should be directed to pass on the repo rate cuts to the market.”

The auto industry also wants the government to direct banks not to reduce lending to those segments which has the lowest NPA, such as the passenger vehicles segment. “To sum it up, what we really need from the government is that for the revival of demand there has to be reduction of GST rates from 28 to 18 per cent. We have been talking to the government on the same,” Wadhera said.

The auto industry has been witnessing a prolonged slump. Passenger vehicles (PV) segment has been the worst hit with sales continuing to decline for almost a year now.

As per SIAM figures, vehicle wholesale across all the categories declined by 12.35 per cent to 60,85,406 units in April-June against 69,42,742 units in same period of last year. Federation of Automobile Dealers Associations (FADA) has stated that nearly two lakh jobs have been cut in the last three months due to the slowdown. —With PTI