At a time when the auto industry is reeling under a severe sales slowdown, the government has proposed a substantial rise in the registration fees which may worsen demand due to increased on-road costs. The Ministry of Road Transport and Highways has recently proposed to hike charges by 10 to 20 times from the current rate, depending on the vehicle category.
If implemented, for those buying new two-wheelers, the proposed registration fee will be Rs 1,000, as opposed to the current Rs 50. Similarly, the renewal charges will be Rs 2,000 compared to the current Rs 50. A new medium goods and passenger vehicle, meanwhile, will attract a registration fee of Rs 20,000 instead of current Rs 1,000. The proposal comes at a time when the auto industry is facing a slowdown with sales witnessing record lows with each passing month, courtesy a liquidity crunch and multiple regulatory changes announced over the last two years.
Auto industry body SIAM said the proposed hike will further aggravate de-growth in the sector and suggested that instead of increasing registration charges, the government should first implement measures suggested by SIAM to revive growth in the domestic automotive industry.
Siam has also asked the government to cut down Goods and Services Tax (GST) rates on automobiles from 28 per cent to 18 per cent and provide more clarity on its electric mobility initiatives. The government, in recent times, has been pushing EVs at the expense of traditional internal combustion engines to achieve its climate treaty commitments and reduce oil imports bills. The government has even proposed to phase out the sale of diesel powered three-wheelers by 2023 and two-wheelers (up to 150 cc) by 2025.
The proposal has already created a sort of panic in the industry with many fearing investments made in developing BS-VI technology will go in vain. “The industry has been grappling with rise in costs to meet emission and safety norms. Customers have also seen insurance costs moving up. Commercial vehicle fleet operators have also seen their profitability decline with lower freight rates and higher diesel prices. With deficient monsoon and the NBFC crisis, the consumer sentiment has also been weak,”Prayesh Jain, exec. VP, YES Securities said.
