Can Sitharaman assist Motown journey the droop out?

With 2019 seeing the worst decline in auto gross sales previously 20 years, the automotive trade is desperately trying ahead for some reduction or assist within the funds.

One solace for the trade is that the federal government is in a “listening mode”. RC Bhargava, chairman of Maruti Suzuki, informed ET that the federal government has extensively interacted with trade and was conscious that demand has to extend. The federal government is greatest positioned to take choices to make sure that occurs, preserving all features of the financial system in thoughts, he added. The auto trade is especially apprehensive that poor financial progress has put stress on per capita revenue, limiting consumption. Furthermore, the price of buying a car has gone up 10-12% within the final couple of years. Car prices are anticipated to go up Eight-10% extra when BS-VI emission norms come into drive in April. This could additional impression affordability and sentiment. The trade, due to this fact, has once more requested the federal government to scale back the products and companies tax to 18% from 28%.


Automakers have additionally requested the federal government to roll out financial advantages for scrapping pre-1995 automobiles. It will, they are saying, assist demand technology and in addition assist cut back air pollution and fight local weather change.

The ministry of highway transport and highways has come out with pointers on establishing scrappage centres and proposed rising re-registration prices to discourage use of previous automobiles. However a proper incentive-based scrappage coverage with financial assist is required.


The trade can also be searching for allocations to assist state transport undertakings procure buses to spice up public transport.

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To speed up electrification, the trade has urged the federal government to cast off the import responsibility on lithium ion cells to advertise native battery producers and better tax profit on greener automobiles. Falling car gross sales have additionally affected auto part makers — the trade noticed a 10.1% decline in turnover within the first half of FY20. Many of the factories are working at their lowest capability utilisation in years.

Deepak Jain, president of Automotive Element Producers Affiliation, says the auto trade goes by means of one in every of its most difficult occasions. “A uniform GST charge of 18% for all auto parts is a key advice from us for the funds. That aside, the trade is eager expertise improvement & acquisition fund be created to facilitate R&D indigenously,” provides Jain.

Reviving demand must be the precedence, says Vinodkumar Ramachandran, companion for automotive and industrial manufacturing at KPMG India. It will imply leaving extra disposable revenue within the palms of the buyer. Fast completion of metro rail initiatives by means of budgetary provisions will cut back site visitors jams, encouraging extra folks to purchase automobiles. “Reviving NBFC funding to stimulate rural-demand progress and offering satisfactory assist for the event of a proposed Gigafactory can stimulate demand for electrical automobiles and be useful for the trade general,” provides Ramachandran.

The automotive sector contributes about 7.1% to GDP, 49% to manufacturing GDP and 15% to GST assortment. A pickup in auto demand in October-November has been a optimistic for GST collections, too.