NEW DELHI: The government is looking into the crisis-hit automobile industries’ recommendation on reduction in the Goods and Services Tax (GST) rates by 10 per cent, said Heavy Industries and Public Enterprises minister Prakash Javadekar.
“We are in discussion with finance minister Nirmala Sitharaman on GST and an announcement will be made soon,” Javadekar said while speaking at the 60th Annual Convention of industry body Siam on Friday. At present, two-wheelers and small cars attract GST of 28 per cent. The industry wants it to be brought down to 18 per cent.
Hit hard by the coronavirus pandemic, India’s automobile industry is going through its toughest period. Auto sales in the first quarter of the current financial year (Q1 FY21) fell over 75 per cent year on year to 6,084,478 units. While the industry witnessed a partial recovery in August, many experts believe negative economic growth and higher unemployment rate will erase the initial gains.
Javadekar also added that the government will also make an announcement on the long pending scrappage policy soon. According to Rajan Wadhera, President, SIAM, the auto industry has been pushed back by 10 years. “The sector performed its best in FY 2018-19. If right demand stimulus is provided, we will reach the FY19 levels by FY24,” he said.
The auto industry, he added, is not ready for further regulations, planned for 2020-23, as these would require more investments which isn’t feasible now due to the pandemic. Kenichi Ayukawa, MD & CEO, Maruti Suzuki India said that cut in GST rate and an incentive-linked scrappage policy are the need of the hour to revive the Indian automobile industry which has been battling declining sales for the last two years.
Industry pushed back by ten years, says SIAM
The auto sector performed its best in FY 2018-19. Given that a demand stimulus is provided, the industry will reach the FY19 levels by FY24, said Rajan Wadhera, President, SIAM. Sales in the first quarter of the current financial year fell over 75 per cent to 6,084,478 units.